Flight tracker websites show the plane was scheduled to take off at 5.15am local time on Wednesday (12.45pm AEDT) but was delayed and took off at 6.15am (1.45pm AEDT).
Civil aviation spokesman Reza Jafarzadeh said an investigation team was at the site of the crash on the southwestern outskirts of Tehran, according to the AP.
Most passengers on board the Ukraine International Airlines flight died, said Pirhossein Koulivand, head of Iran's Emergency Medical Services.
The Boeing 737 had left Tehran's worldwide airport bound for Kiev, semi-official news agency ISNA said, adding that 10 ambulances were sent to the crash site.
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Ukraine International Airline has announced that the "Boeing 737" that recently crashed on the Iranian territories had a perfectly working engine.
Vadym Prystaiko said they were among the more than 170 people from seven countries on board the flight from Tehran to Kyiv.
The crash occurred just hours after Iran launched a missile attack on United States troops stationed at two air bases in Iraq.
The incident comes just hours after news of Iran's strike against American military targets.
The plane belonged to Ukraine International Airlines, which said the Boeing 737 involved in the crash had been built in 2016 and was checked only two days before it went down.
According to aviation tracking sites, the plane is a 737-800 and was manufactured about three-and-a-half years ago - an earlier generation than the troubled MAX aircraft that has been grounded globally.