Supreme leader Ayatollah Ali Khamenei sneered at Trump’s threats over Iran’s nuclear programme after the Middle Eastern power fired a missile last week.
Trump had warned Iran was “on notice” and “playing with fire” but Tehran is continuing its missile drills – firing another weapon on Sunday.
Tehran has now warned the US and Iran have “dark days ahead” as thousands flooded the streets with banners reading “Down with USA”.
Earlier this week Khamenei struck back after a meeting with his military leaders and promised the nation is planning to respond to mark today’s anniversary of the Iran’s revolution in 1979.
Since then Trump’s adminstration has threatened to blacklist Iran’s elite military force the Revolutionary Guard as terrorists as tensions continue to brew.
Ali Akbar Velayati, foreign-affairs adviser the Ayatollahi, said “Washington does not dare carry out its military threats against Iran”.
“The Americans know very well that Iran and its allies in the region would retaliate very hard, that will make America face dark days to come,” he said.
Hundreds of thousands of Iranians are rallying across the country to celebrate the 38th anniversary of the revolution.
Carrying “Death to America” banners and effigies of Trump, Iranians in Tehran marched towards the Freedom Square.
“No enemy can paralyse the Iranian nation,” Khamenei was quoted as saying by his website after a meeting with his commanders in Tehran.
The meeting came after Trump’s administration slapped a new raft of sanctions on Iran and deployed a destroyer off Yemen in move to intimidate Tehran’s allies the Houthi rebels.
Today sees Iran mark the Islamic Revolution which saw the overthrow of the US-backed Pahlavi dynasty and the establishment of a republic beneath the Ayatollah.
Iranians have flooded the streets after Tehran as the Ayatollah promised to confront “warmongers”.
Marchers burned US flags and carried banners depicting Trump and Prime Minister Theresa May with the message “not scared of threats”.
Caricatures of Trump being punched by an Iranian fist with the words “down with the US” were waved by crowds.
Earlier this week, Khamenei said: “Trump says ‘you should be afraid of me’. No.
“The Iranian people will respond to his words on Febuary 10, and will show their stance against such threats.”
He added: “We are thankful to (Trump) for making our life easy as he showed the real face of America.
“During his election campaign and after that, he confirmed what we have been saying for more than 30 years about the political, economic, moral and social corruption in the US ruling system.”
Tensions between Iran and the US have spiked in the wake of Trump’s so-called Muslim ban which cracked down on refugees from the Middle East.
Chilling threats were issued by the head of Iran’s Revolutionary Guard who said “roaring missiles” will fall on the heads of their enemies.
Iran has also boosted its uranium stocks amid the threat of a nuclear face-off with Trump and the US.