"When the president [Barack Obama] would give the order ... it would be tantamount to ordering the instant death not only of hundreds of millions of people including an inestimable number of residents of the United States as well, but also the crew member of all of the United States navel craft in the seas heading towards Iran," Castro said.
"Simultaneously with this, the conflagration would break out in the Middle East and Eurasia."
Castro said that the current world order "cannot last and will inevitably collapse".
He asserted that foreign exchange reserves, which have created wealth by taxing hard working publics, would also fall apart.
But he warned that were nuclear war to break out that change would be hastened.
"If war were to break out, the current world order would disappear abruptly and the price would be much greater," he said.
Al Jazeera's Latin America editor Lucia Newman said: "He looked certainly a lot better than he has in a long time and that was one of the points that he was trying to make - that although he has been out of the public eye he is still in the picture.
"It was a message to the Cuban people and the world that he should be listened to. And he was talking directly to the president of the United States."
'Long live Fidel!'
Wearing his trademark olive green military uniform, Castro had entered the chamber to cheers of "Fidel, Fidel, Fidel", and "Long live Fidel! Long live Raul!".
Castro had an assistant with him when entering the assembly, but stood independently at the podium.
He spoke for 11 minutes - a relatively short time considering his typical lengthy speeches - and Raul Castro was also present in parliament.
It is the first time the pair have been seen together in the same room since the change of power.
Castro emerged from private seclusion earlier this week, meeting with a Communist youth group among other public appearances.
He has not been able to appear publically since undergoing emergency intestinal surgery in July 2006. He renounced the presidency in 2008.
Cuba has been a one-party Communist state since 1959 when Castro ousted Fulgencio Batista, a dictator supported by the US.