One MP described Sunday’s move as a "coup d'etat".
There was uproar in parliament - held for the past four years by moderates loyal to President Muhammad Khatami - as it emerged the Guardians' Council had also barred leading pillars of the reform movement, including the brother of the president.
"I consider this rejection of candidates to be an illegal coup d'etat and an act of regime change by non-military means," fumed Muhsin Mirdamadi, head of the parliament's foreign policy and national security commission.
Mirdamadi was one of more than 80 incumbent reformist MPs barred from standing in the 20 February election by the 12-member Guardians' Council, an unelected political oversight body and bastion of the religious right.
He said the bulk of disqualified MPs were found to have been in violation of an article in the electoral law, stipulating a commitment to Islam and the position of Ayat Allah Ali Khamenei as supreme leader.
"Violence must be averted. We should not do anything to stoke tensions."
President of Iran
"It is like in a football match where the referee sends off all the players from one team," commented Vice President Muhammad Ali Abtahi.
Mujammad Reza Khatami, the president's brother and head of the Islamic Iran Participation Front (IIPF) - the Islamic republic's largest pro-reform party - said "we are heading in the direction of a national election boycott" and warned of dire consequences for Iran's international image.
The Majlis building was later occupied by a group of about 60 reformist MPs for an all-night sit-in. Some of them were disabled war veterans and former prisoners under the regime of the shah.
A senior politician also revealed a group of up to eight cabinet ministers had "prepared their letters of resignation", while all of the country's 27 provincial governors said in an open letter to the president they would also quit unless the crisis was resolved within a week.
And in a defiant gesture, Iran's interior ministry - the body responsible for organising elections - branded the massive disqualifications "illegal" and warned in a statement they would not be enforced.
The president himself made an impassioned appeal for calm, and said the ruling would be challenged through "legal channels".
President Khatami has called for
"Violence must be averted. We should not do anything to stoke tensions," Khatami said, alluding to fears the latest explosion of reformist-conservative tensions could again bring out pro-reform students already frustrated with the slow pace of reforms to the streets.
The Guardians' Council is a senate-like body that vets all Majlis legislation to see if it complies with Islamic law and the constitution.
Dominated by conservatives - all at odds with the reformist attempt to shake up the way the 25-year-old Islamic republic is run and directly or indirectly appointed by Khamenei - it has binned scores of bills passed by parliament since reformists won the last legislative elections in 2000.
The body also has the highly contested right, through its electoral vetting arm, to screen candidates for public office. The parliament has tried, but failed to end this power.
Amid widespread frustrations with President Khatami and the reform movement, analysts had already been pointing to a possible all-time low voter turnout next month, and the handing of power to conservatives who can rely on a hardcore support base - exactly what occurred during municipal elections in February 2003.