U.S. President Donald Trump designated Iran's Guards a foreign terrorist organization on Monday -- an unprecedented step that will raise tensions in the Middle East.
"They wish to plot against our Sepah (the Guards)... it is in the frontline of confronting enemies of our [1979 Islamic] revolution and has always defended the country... America has failed to block our advancements," Khamenei said, addressing a group of Guards.
"In spite of all the pressure in the past 40 years, Americans have failed to do a damn thing and their vicious move will bear no fruit."
Iranian President Hassan Rouhani also defended the corps as protectors of Iran, saying in a televised speech that the United States "holds a grudge" against the Guards who have "sacrificed their lives to protect our people, our revolution."
Comprising an estimated 125,000-strong military with army, navy and air units, the Guards also command the Basij, a religious volunteer paramilitary and control Iran's missile programs. Its overseas Quds forces have fought Iran's proxy wars in the region.
The U.S. has already blacklisted dozens of entities and people for affiliations with the Guards, but not the organization as a whole.
Trump's move comes after relations between Tehran and Washington took a turn for the worse last May, when Trump pulled out of a 2015 nuclear deal between Iran and six world powers, and reimposed sanctions.
Tehran took retaliatory action by naming the United States Central Command (CENTCOM) as a terrorist organization and the U.S. government as a sponsor of terror, and Iranian officials warned the move will endanger U.S. interests in the region, where Iran is involved in proxy wars from Syria to Lebanon.
"This mistake will unite Iranians and the Guards will grow more popular in Iran and in the region ... America has used terrorists as a tool in the region while the Guards have fought against them from Iraq to Syria," Rouhani said.
Iranian Revolutionary Guards commanders have repeatedly said that U.S. bases in the Middle East and U.S. aircraft carriers in the Gulf are within range of Iranian missiles.
Tehran has also threatened to disrupt oil shipments through the Strait of Hormuz in the Gulf if the United States tries to strangle Tehran's economy by halting its oil exports.
Iran's arch rival Saudi Arabia welcomed the U.S. decision on Tuesday. "The U.S. decision translates the Kingdom's repeated demands to the international community of the necessity of confronting terrorism supported by Iran," Saudi state news agency SPA said, citing a foreign ministry source.
In a show of support, Iranian lawmakers wore Guards' uniforms to parliament on Tuesday, chanting "Death to America” as Iran marked the annual National Day of the Revolutionary Guards, the semi-official Fars news agency reported.
"America's decision to label the Guards as a terrorist group was the peak of stupidity and ignorance of the American leadership," Fars quoted parliament Speaker Ali Larijani as saying.
Iran has so far continued to comply with the nuclear deal, but Tehran's clerical rulers have threatened to withdraw from it and to resume the suspended nuclear work if other signatories of the pact fail to protect Iran's interests.
"I am telling you (American leaders), if you pressure us, we will mass produce IR8 advanced centrifuges," Rouhani said in the speech marking Iran's National Nuclear Day.
Under the nuclear deal, sanctions imposed by the United States, European Union and United Nations were lifted in return for Iran agreeing long-term curbs on a nuclear program the West suspected was geared to developing an atom bomb.
The Trump administration says the nuclear deal did not do enough to curb Iranian meddling in regional affairs or restrict its ballistic missile program.
"Since last year, we have acquired kind of missiles that you cannot even imagine," Rouhani said, referring to Iran's determination to continue expanding its missile program despite mounting U.S. pressure to curb it.
Co-signatories Britain, France and Germany are trying to salvage the deal and set up in January a mechanism to allow trade with Tehran and circumvent U.S. sanctions.
But Iran has criticized the EU for failing to "honor its pledges" to protect trade with Iran. Rouhani, who could be weakened by a blow to Iran’s economy if the deal falls apart, struck a tough tone in his televised speech.
"We have been patient and will continue to be patient ... but our patience has a limit ... Fulfill your commitments and respect your pledges," Rouhani told the EU.