Iran has cut all trade ties with Denmark in protest at the cartoons satirising the Prophet Muhammad that first appeared in a Danish newspaper.
The anger in Iran has mirrored that across the Middle East
Iran's Commerce Minister Masoud Mir-Kazemi said the ban covered all Danish imports as well as any other business dealings.
On Monday evening a crowd of about 400 demonstrators threw petrol bombs and stones at the Danish embassy in Tehran.
Protests against the cartoons have taken place across the Muslim world.
Reporters at the scene outside the Danish embassy in a residential district of northern Tehran, said the crowd was chanting: "Death to Denmark."
Iranian police subsequently drove protestors back with tear gas and some were arrested.
The Danish embassy had earlier in the day asked Iranian authorities to provide more security outside the building, although no diplomatic staff are inside.
Denmark's embassies in Damascus, Syria, and Beirut, Lebanon were set on fire by protestors at the weekend.
Austria's embassy in Tehran was also attacked on Monday.
Iran currently imports $280m (£160m) worth of goods from Denmark each year. That works out at about 0.3% of Denmark's total exports.
The trade ban comes after hardline Iranian President Mahmoud Ahmadinejad strongly attacked the offending pictures.
Tehran has already recalled its ambassador to Denmark and has also summoned the ambassadors of Denmark, Norway and Austria to express its anger.
The offending cartoons first appeared in a Danish newspaper last September.
Last week the row escalated after a number of European newspapers republished the pictures, saying they were defending freedom of expression.