Britain, along with the US and other countries, suspects that Iran wants to develop nuclear technology to build a bomb. Iran denies this and says its nuclear programme is for generating power.
The issue is being considered by the United Nations Security Council, which could eventually introduce sanctions against Iran.
The US administration has said all options are on the table to prevent Iran from developing nuclear weapons.
Asked on BBC radio whether a military attack on Iran was inconceivable, Straw said: "Yes, it is.
"No American president is ever going to theoretically rule out any option; in practice, military action is not on the Americans' agenda."
He contrasted Iran's position now to that of Iraq, saying the latter had launched missile attacks on five nations, invaded two countries and had used chemical weapons.
"Iran is not in that situation. I don't expect them to be in that situation for a moment. [There is] actually no history of Iran launching attacks on other countries," Straw said.
"This is an issue which has to be resolved, yes by pressure, but by peaceful and democratic means."
Many countries shocked when Iran's president called for Israel to be wiped off the map and is worried that an Iran armed with nuclear weapons would destabilise the Middle East.
However, Straw is expected to say in a speech later on Monday that having Iran's nuclear issue discussed at the UN Security Council marks a new phase in diplomatic efforts, not an end of diplomacy.