Mousavi, a moderate who is hoping to win votes from both reformers and conservatives, is seen as Ahmadinejad's main opponent in the election.
In the live debate, Karroubi questioned Ahmadinejad's aggressive foreign policy and what he called his mishandling of the country's economy.
Ahmadinejad countered accusations with statistics and graphs indicating economic growth under his government.
|Karroubi is popular among many Iranians for his perceived pragmatic policies [AFP]
Karroubi rejected the data, insisting that people cared little for the science of economics when the reality of their daily lives was evidence enough that things had become harder over the past four years.
"It is not something imaginary. Even ordinary people like my mother and my grandmother, who have both passed away, understood inflation because when they went to buy meat, they found out that it was expensive," he said.
Rising consumer prices and lack of jobs are the loudest complaints among many Iranians, especially in big cities.
Ahmadinejad has hit back at critics blaming him for the inflation with profligate spending of petrodollars since he came to office in 2005.
He says the rate is declining and will soon fall below 10 per cent, compared with 18 per cent in March.
The rate, which peaked at nearly 30 per cent in October, was about 11 per cent when Ahmadinejad came to power four years ago pledging to share out Iran's oil wealth more fairly and reviving the values of its 1979 Islamic revolution.
Foreign policy pledge
Ahmadinejad has vowed to continue his foreign policies if elected as the tenth president.
Ahmadinejad's critics say his fiery anti-Western speeches and questioning of the Holocaust have isolated Iran, which is at odds with the West over its disputed nuclear programme.
Iran says its work is for electricity generation, but a number of Western countries believe the aim is to build nuclear weapons.
In his debate with Ahmadinejad on Wednesday, Mousavi accused him of humiliating the Iranian nation by adopting an "extremist" foreign policy.
Ahmadinejad accuses his rivals of trying to weaken the Islamic state by advocating detente with the West.