Iranians staged multiple protests in the capital, Tehran, and other cities such as Mashad in Iran's east, holding banners carrying anti-Israel and pro-Palestinian slogans.
"Death to Israel, death to America," read many placards.
The street demonstrations are being held as part of annual al-Quds Day (Jerusalem) protests, first held in 1979 after Shia Muslim clerics took power in Iran.
The state-organised rallies were expected to grow throughout Friday as worshippers gathered for midday sermons and prayers at mosques across Iran.
At the same time, however, Iran's embassy in Moscow has sought to smooth the effects of President Mahmoud Ahmadinejad's comments, saying the president did not mean to speak in such "sharp terms".
The statement was the first official Iranian reaction since the president's speech on Wednesday to a meeting of consevative Islamic students.
"Mr Ahmadinejad did not have any intention to speak up in such sharp terms and enter into a conflict," the Iranian embassy's statement said.
"Mr Ahmadinejad did not have any intention to speak up in such sharp terms and enter into a conflict"
Iranian embassy in Moscow
"It's absolutely clear that, in his remarks, Mr Ahmadinejad, president of the Islamic Republic of Iran, underlined the key position of Iran, based on the necessity to hold free elections on the occupied territories."
World leaders have condemned President Ahmadinejad's remarks - a repetition of a call from the late Ayat Allah Khomeini, founder of Iran's Islamic revolution, that "Israel must be wiped off the map."
The United States, Canada, Russia and UN Secretary-General Kofi Annan, in addition to European leaders, all issued statements criticising the Iranian leader's comments.
And Russia, Belgium, Britain, France, Germany, Ireland and Italy summoned the Iranian ambassadors in their respective capitals to demand an explanation.
In the UK, Prime Minister Tony Blair said the issue highlighted concerns over Iran's nuclear programme.
Israel meanwhile issued its own call for Iran to be expelled from the United Nations as a result.
UN Secretary-General Kofi Annan, in his own statement expressed "dismay" over the Iranian president's comments, and said he would make the Middle East peace process the focus of a trip he had planned to Tehran in November.
He said Israel, a long-standing member of the United Nations, had the same rights and obligations as every other member.