Hundreds of thousands of Iranians have marked the 25th anniversary of the revolution which ousted the Shah and swept the Islamic regime to power.
Thousands gathered in the Iranian capital, Tehran
President Mohammad Khatami told a huge rally in the capital, Tehran, that the country faced a "fork in the road".
It could imitate the West and lose its identity, choose extremism or embrace the "path of the Islamic republic and of reforms", he said.
Commemorative rallies were also held in other major Iranian cities.
Many of those who attended the Tehran rally were regime loyalists - state employees and their families who were bussed in specifically for the occasion.
There were ritual chants of "death to America" and effigies of US President George W Bush were set on fire.
IRAN'S REINS OF POWER
Supreme leader Ayatollah Ali Khamenei: Appointed for life, overrides all other authorities
Guardians Council: Half chosen by Khamenei, responsible for vetting election candidates and laws
President Mohammad Khatami: Elected for four years, power can be circumscribed by clerics
Parliament: 290 members introduce and pass laws, subject to approval
There were also many placards bearing the images of the father of the revolution, Ayatollah Khomeini, and the current Supreme leader, Ayatollah Ali Khamenei.
However, there were none at all of Mr Khatami and there was little applause following his speech.
In his remarks, Mr Khatami condemned the current troubles, which began when the unelected Council of Guardians banned more than 2,500 reformist candidates from standing in the elections.
"Elections are a symbol of democracy if they are performed correctly," he was quoted by the Associated Press news agency as saying.
"If this is restricted, it's a threat to the nation and the system. This threat is difficult to
Mr Khatami also said that he would serve out his remaining time in office - which ends next year - and would continue to push for reforms.
"I know no other path than that of reforms," he said.
Mr Khatami may feel he has little to celebrate, with Iran plunged into a political crisis over this month's parliamentary elections, analysts say.
BBC correspondent Jim Muir says that, following the candidates' disqualification, nobody knows what direction the country will take in the future.
Many people saw the massive election victories of the reformists from 1997 on as a sort of second revolution within the revolution, our correspondent says.
They hoped they would deliver the freedoms that had been stifled as the clerics imposed their grip after the overthrow of the Shah in 1979.
Ayatollah Khomeini's return from exile was greeted by millions in the capital 25 years ago.
Since 1997 powerful entrenched hardliners have made sure that the elected reformists have been able to achieve little for their years in office.
Hopes for peaceful change from within the regime have been dashed, at least for the moment, our correspondent adds.
He says few people want to see radical change brought about by violence and upheaval.