More than 100 Israeli F16 and F15 jets were involved in the exercise
Iran has said it considers a military attack on its nuclear facilities by Israel as "impossible".
"Such audacity to embark on an assault against the... territorial integrity of our country is impossible," said spokesman Gholam Hoseyn Elham.
The statement follows reports in the US media that Israeli aerial manoeuvres over the eastern Mediterranean were a possible test-run for a strike on Iran.
Iran insists that its nuclear programme is for peaceful purposes.
It has repeatedly rejected demands to halt enriching uranium, which can be used as fuel for power plants or material for weapons if refined to a greater degree.
The head of the UN's nuclear watchdog, Mohammed ElBaradei, meanwhile said an attack would put Iran on a "crash course" to building nuclear weapons and would turn the region "into a fireball".
He said he did not believe there was any "imminent risk" of proliferation by Iran given the current status of its nuclear programme.
In an interview with Al Arabiya television, Mr ElBaradei said that if any military action was taken against Iran he would find it impossible to continue as the head of the IAEA.
Iran's defiant message follows a report in the New York Times on Friday.
The newspaper cited US Pentagon officials as saying that the Israeli exercise - involving more than 100 Israeli fighter jets - was intended to demonstrate the seriousness of Israel's concern over Iran's nuclear activities, and its willingness to act unilaterally.
It said helicopters and refuelling tankers flew more than 1,400km (870 miles), roughly the distance between Israel and Iran's main uranium enrichment plant at Natanz.
The New York Times reported that Israeli officials declined to discuss the details of the exercise. The US state department would not comment on the Israeli exercise.
Offer on table
Iran is said to be considering an offer from six world powers of preliminary talks, which would be used to agree a framework for formal negotiations and incentives.
The talks are on the condition that Iran freeze its current levels of enrichment for six weeks in exchange for the powers putting a halt on their push for new sanctions.
EU foreign policy chief Javier Solana put forward the proposal - made by the five permanent members of the United Nations Security Council the US, China, Russia, France, Britain plus Germany - during talks in Tehran last week.
He said the six powers were ready to fully recognise Iran's right to have a civilian nuclear energy programme.