Mr Solana's visit to Tehran is part of European efforts towards engagement with Iran - in contrast to Washington's strategy of trying to isolate the Islamic republic, correspondents say.
At a news conference after meeting Iran's Foreign Minister, Mr Solana credited the reforms of President Mohammad Khatami for improving dialogue between Europe and Tehran.
"In recent years, there has been an improvement in EU-Iran relations," he said.
"Let me make clear from the outset that the process of reform in Iran has been crucial for this positive development."
The talks follow an announcement by the EU last month that it is to begin negotiations with Iran towards a trade cooperation agreement.
Political reform
Mr Solana acknowledged that there were considerable differences between the two camps on issues such as nuclear weapons and the Middle East.
And he made it clear, in referring to any future negotiations on trade agreements, that political reform should take on equal importance alongside economic improvement.
"We do not believe that an agreement between the EU and Iran can be only about economic and commercial aspects," he said.
"It also has to cover political issues, human rights, the fight against terrorism."
Iranian Foreign Minister Kamal Kharrazi, in response, praised the European Union for not following the US line in branding the country part of an "axis of evil".
He claimed the US policy had "[damaged] the interests of the United States itself and the rest of the world" through its "support for Israeli atrocities against the Palestinian people," French news agency AFP reported.
During his visit, Mr Solana is also to have talks with President Khatami as well as his conservative predecessor Akbar Hashemi Rafsanjani, and the chairman of Iranian Parliament's foreign affairs committee, Mohsen Mirdamadi.