The United Nations has imposed sanctions on Tehran over its nuclear activities and the US has refused to rule out taking military action to destroy Iran's nuclear programme.
 
Ahmadinejad made a similar remark in last year's annual army day ceremony saying Iran would "cut off the hands of any aggressors".
 
"They think that with sanctions on our weapons we would be paralysed but we have succeeded in producing all we need in arms," said Ahmadinejad in his brief address to the armed forces.
 
Iran has rejected accusations that it is trying to built an atomic bomb and has said that its nuclear programme is peaceful.
 
Israeli exception
 
Following Ahmadinejad's speech, the army paraded in front of the president and many of Iran's most senior military officials.
 
The display showed off regiment after regiment of ground forces, tanks, a new set of drones and medium-range Nazeat (Meteor) missiles one of which was inscribed with "Death to Israel".
 
However, Iran's longer-range ballistic missiles, which are under the control of the Revolutionary Guards, were not on display and there was no sign of any hitherto unknown weaponry.
 
Iran also showed off a succession of new drones with names like Oqab (eagle), Sayad (hunter) and Azarakhsh (thunderbolt) which it said were able to confront "any aerial or ground threat by the enemy."
 
Also on display were Zelzal-2 missiles which are said to have a range of 100 to 400 kilometres (60 to 250 miles).
 
Ahmadinejad said that despite the standoff, Iran wanted to have friendly relations with all countries, with the exception of Israel which it refuses to recognise.
 
"Our people hold out the hand of friendship to all the peoples. We want friendly and just relations with all the peoples except the Zionist regime," he said.
 
The parade was held near the tomb of Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic.