The Kavoshgar 3 rocket is successfully launched
Iran has successfully test launched a rocket, state media have reported.
The reports said the rocket was a Kavoshgar 3 carrier with an "experimental capsule" that carried a rat, turtle and worms.
BBC Tehran correspondent Jon Leyne says it will raise concern about Iran's growing rocket technology and possible links to its nuclear programme.
Iranian television showed the rocket being fired and later the capsule was seen detaching and spinning into orbit.
The Iranian Aerospace Organisation (IAO) said the capsule included a mini-laboratory and a video camera to enable "further studies on the biological capsule", Iran's Press TV reported.
President Mahmoud Ahmadinejad was also shown unveiling another Iranian-made rocket, called the Simorgh.
"It is a great job that living organisms can be sent into space, we do experiments on them and they return to Earth," he said.
"We are going to send a satellite 500km (310 miles) up. The next steps are 700 and 1,000km (435 and 620 miles). Everyone knows that reaching the 1,000km orbit allows you to reach all orbits."
The rocket launch came as Iran marked Space Technology Day as part of celebrations marking the 31st anniversary of the Islamic revolution.
It is the latest in a series of rocket tests that have alarmed the West.
In December 2009, Iran launched an improved version of its Sajjil-2 medium-range rocket.
Experts say the Sajjil-2 has a range of about 2,000km (1,240 miles), which would encompass Israel and US bases in the Gulf.
In September, Iran also tested its Shahab 3 medium-range missile which can also travel 2,000km (1,243 miles).
The West fears Iran is trying to develop nuclear weapons and ballistic missiles to carry them, but Iran has denied this.
On Tuesday, President Ahmadinejad said his country was ready to send low enriched uranium abroad in exchange for higher grade nuclear fuel.
Correspondents say that such a decision would be a major shift in Tehran's position.