Agencies said Iran on Monday confirmed for the first time that it had converted 37 tonnes of raw uranium into gas.
Tehran said it took the important step towards enrichment before it suspended all such activities in November under international pressure.
"We converted all the 37 tonnes of uranium concentrate known as yellowcake into UF-4 at the Isfahan Uranium Conversion Facility before we suspended work there," Mohammad Saeedi, deputy head of the Atomic Energy Organisation of Iran, said.
Nuclear experts say that when fully processed, the 37 tonnes of yellowcake can theoretically yield more than 90.9kg of weapons-grade uranium, enough to make five crude nuclear weapons.
The confirmation means Tehran is in a position to quickly start enriching uranium, if it chose to end its suspension of enrichment-related activities.
It comes at a crucial time, with Europe trying in fragile negotiations to seal an agreement to ensure that Iran's nuclear programme does not produce nuclear weapons.
To show its dissatisfaction with lack of progress in nuclear talks between Iran and key European powers, Foreign Ministry spokesman Hamid Reza Asefi said on Sunday Iran had decided to resume some uranium reprocessing activities.
Saeedi said that might happen in the next two or three days.