Iran says it is suspending uranium enrichment and will allow tougher UN inspections of its nuclear facilities.
The US fears Iran will uses its N-programme to produce weapons
Hassan Rowhani, secretary of Iran's Supreme National Security Council, said the move was intended to "eliminate all concerns and fears".
The United States has accused Iran of seeking to develop nuclear weapons, a charge which Tehran denies.
Iran says it has told the UN's nuclear watchdog that its uranium enrichment will be suspended from Tuesday.
The enrichment process can be used to develop atomic bombs.
Iran's ambassador to the International Atomic Energy Agency (IAEA), Ali Akbar Salehi, told the BBC that the Iranian decision had been conveyed to IAEA director-general Mohamed ElBaradei in a letter.
The move was announced earlier in Moscow by Rowhani, who said Iran had decided to "carry out all of its future nuclear programmes within the framework of international rules and regulations", the Russian news agency Itar-Tass reported.
Russia has repeatedly delayed plans to start up the $800m nuclear reactor it is building with Iran in the south-western port of Bushehr.
A report by Mr ElBaradei says the IAEA
has found "no evidence" that Iran is trying to make nuclear weapons, but cannot at this time say that Tehran's programmes are strictly peaceful, according to diplomats in Vienna, where the IAEA is based.
The report faults Iran for concealing nuclear activities, the diplomats said.
Earlier, Russian President Vladimir Putin said Moscow believed Iran had the right to enrich uranium, but was happy that Tehran had "itself resolved to limit itself".
He added that, in light of the announcement, Moscow no longer saw any obstacle to continuing nuclear co-operation with Tehran.
The Additional Protocol - which Iran says it will sign - allows IAEA experts to extend their inspections in Iran to areas that had previously been barred to them.
Tehran promised to suspend the uranium enrichment process last month during talks with EU members Britain, France and Germany.
But it emerged shortly afterwards that the process was continuing as officials were "studying how to halt the nuclear fuel cycle", according to a foreign ministry statement.
The Europeans want Iran to stop this processing permanently and to accept fuel for its nuclear power from them.
The IAEA is reviewing Iranian compliance with its obligations under the nuclear non-proliferation treaty (NPT).
But a western diplomat quoted by Reuters said the US had little chance of having Iran declared by the IAEA board to be in non-compliance with the NPT.
Such a declaration would require reporting Iran to the UN Security Council, which has the right to impose sanctions.
Russian Foreign Minister Igor Ivanov said Monday's announcement by Iran would "open up additional possibilities for Russian and Iranian co-operation in many spheres, including nuclear".
Mr Rowhani responded: "They (the Russians) are telling us that they will finish construction of the Bushehr reactor and we will start negotiations on building a second".