"The Palestinian people are standing firm. The Iranian people and other peoples will not stop until all of Palestinian territory is liberated," Ahmadinejad said in a speech broadcast on state radio to mark the day.
"They [world powers] should not think that the Iranian nation and other nations in the region will take off their hands off the throat of the Zionists and their supporters."
Ahmadinejad provoked an international outcry shortly after his election in 2005 when he quoted Ayatollah Khomeini as saying the "regime occupying Jerusalem must vanish from the page of time", widely mistranslated in the international media as "Israel must be wiped from the map".
In his speech at Tehran university on Friday, the president also repeated his controversial questioning of the Holocaust, and what it had to do with Palestinians.
"The countries that feel threatened ... should prepare for defense, and even counterattack"
Adolfo Talpalar, Stockholm, Sweden
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"The Iranian nation hates killing and considers Hitler and the executioners of the World War II as black and dark figures," he said.
"But the Iranian nation has a question and as long as there is no clear and reasonable response to this question, it will remain."
Ahmadinejad said "Zionists" should move to empty lands in Europe or North America and out of the Middle East entirely.
"Europeans cannot tolerate the Zionists in their region and country, but they want to impose them on the people of the region ... Give these vast lands of Canada and Alaska to them to create a country for themselves."
Israel, widely believed to be the only country armed with nuclear weapons in the Middle East, has expressed alarm over Iran's nuclear drive, which Israeli and the US believe is aimed at making an atomic bomb.
Iran, however, insists that its nuclear programme is solely aimed at generating electricity for a growing population whose giant oil and gas reserves will eventually run out.
Mohammad Reza Pahlavi, the former shah of Iran, was a close ally of Israel, developing close military and economic ties. But all that changed when he was ousted by the Islamic revolution in 1979.
Iranian officials, however, insist they would never initiate any military attack and say their policy has always been to let all the occupants of "Palestine" - including refugees - decide their future in a referendum.