The Iranian Foreign Ministry confirmed that its Peshawar consulate's commercial attache Heshmatollah Attarzadeh Niyaki had been kidnapped.
Iran's state radio quoted Hassan Qashqavi, the foreign ministry spokesman, condemning the kidnapping as "a terrorist act", while Iran's Student News Agency (ISNA) reported the ministry had summoned Pakistan's envoy in Tehran to protest the inadequate protection provided for its diplomat.
The abduction came a day after an American aid worker was shot dead outside his home in the city.
Peshawar is the last city on the road to the Khyber Pass, the main land route to Afghanistan.
Mohammed Manzoor, another police official, said that the authorities had cordoned off the city's main roads.
Police are trying to trace the kidnapped Iranian.