The Israeli Eros B satellite was launched from a mobile pad at the Svobodny cosmodrome in Russia on Tuesday at 8:47pm (1647 GMT), said Alexei Kuznetsov, a spokesman for the military space forces.
About 20 minutes later, the satellite successfully reached orbit, Russian news agencies reported, citing the space forces' press service.
Israel's Channel 10 TV reported that the launch was successful, but the satellite would not deploy its power panels for another day and a half.
The launch came as Iran and Israel, two sworn enemies, continued to trade barbs.
On Monday, Mahmoud Ahmadinejad, the Iranian president, repeated calls for Israel's annihilation, saying the Jewish state was a "fake regime" that "cannot logically continue to live".
Shaul Mofaz, the Israeli defence minister, said earlier in the week that the nuclear programme being pursued by Iran was the most serious threat faced by Jews since the Nazi Holocaust.
Israel's Eros B satellite is designed to spot images on the ground as small as 70cm (27.5 inches), a defence official said.
"This satellite has very high resolution, and Israel Aircraft Industries has a great ability to process information that is relayed"
Israeli defence official
That level of resolution will allow Israel to gather information on Iran's nuclear programme and its long-range missiles, which are capable of striking Israel, he said, asking to remain anonymous.
"The most important thing in a satellite is its ability to photograph and its resolution," he said.
"This satellite has very high resolution, and Israel Aircraft Industries has a great ability to process information that is relayed."
The Israeli mass-circulation paper Yediot Aharonot reported that Eros B will join an earlier version of the satellite, launched in December 2000.
Both are set to augment the work of Israel's declared spy satellite, Ofek 5, which regularly passes over Arab territory.
The paper said Israel was planning to send up another spy satellite with the ability to view objects in all weather conditions and in darkness.
"The fact that we are launching the satellite in Russia means that we can do so with the Earth's rotation and makes it more effective and gives it a longer life span"
Chief executive of ImageSat International
The Eros satellites are effective only in daylight and in clear visibility.
The launch comes at a time of heightened tension over Iran's nuclear programme.
The United States accuses Iran of seeking to build nuclear bombs and has refused to rule out military options if diplomacy fails to curb the Islamic Republic's atomic ambitions.
Iran says its nuclear programme is peaceful and aimed at generating electricity.
The Eros satellites, which weigh less than 350kg, are among a number of small, lightweight satellites that Israel's space industry has perfected, the chief executive of ImageSat International, Shimon Eckhaus said.
The satellite manufacturer ImageSat International is partly owned by Israel Aircraft Industries, the country's biggest defence company.
Because of the country's location and size, the space industry favours smaller payloads that can more easily be launched from Israeli territory.
"The fact that we are launching the satellite in Russia means that we can do so with the Earth's rotation and makes it more effective and gives it a longer lifespan," Eckhaus said.
Israel is only able to launch small satellites westwards over the Mediterranean Sea - opposite to the Earth's rotation - because it cannot risk rockets flying over its Arab neighbours to the east or debris falling on their territory.