Its atomic energy chief told state television on Sunday that "the experimental phase of the Isfahan processing installation has begun and by the end of this phase, in the next 20 days, experimental production at this facility will start".
"The uranium processing plant in Isfahan will produce all raw materials for the fuel cycle," Ghulam Reza Aghazadeh added.
The Isfahan installation is described as a Uranium Conversion Facility (UCF), where the refining of yellow cake takes place to produce materials that can be then used to produce enriched uranium.
In a deal with the International Atomic Energy Agency (IAEA) brokered by Britain, France and Germany late last year, Tehran agreed to suspend uranium enrichment - and all related activities.
And UN inspectors delved into suspicions that Iran was using an atomic energy programme as a cover for developing nuclear weapons.
But Iran, under massive international pressure to maintain the suspension, has consistently emphasised its right under the nuclear Non-Proliferation Treaty (NPT) to produce nuclear fuel for what it insists are strictly peaceful purposes.
Iran also appears to be working to a more narrow definition of the suspension - which diplomats say the Europeans had hoped would entirely halt Tehran's work on the highly sensitive nuclear fuel cycle.
Aghazadeh said the "voluntary suspension of uranium enrichment in Iran was a move to build trust with the IAEA, and based on the order of the Supreme National Security Council secretariat, the Iranian Atomic Energy Organisation will suspend … building parts and facility construction".
He did not elaborate, but state television added in a commentary that the Isfahan facility, situated near the historic city in the centre of the country, was "not part of the deal with the IAEA" and had been declared to the Vienna-based body in 2000.
IAEA inspectors arrived in Iran on Saturday for a visit which Tehran had delayed earlier this month after the body condemned Iran for failing to report that it had designs for sophisticated P2 centrifuges for enriching uranium to levels that could be weapon-grade.