Prices of basic foodstuffs have soared since President Donald Trump withdrew Washington from world powers' 2015 nuclear deal with Iran previous year and reimposed sanctions on Tehran.
Later that year, Iranian militants took dozens of people hostage at the US Embassy in Tehran, sparking the first round of sanctions from Washington and causing a lasting rupture in countries' relations.
People from different walks of life have attended the processions with flags of Iran and banners in support of the Islamic Republic to mark the revolution's ruby jubilee.
The Israeli leader has vowed to annihilate the Islamic Republic if it follows through on its threats.
Imam Khomeini had lived many years in exile, in Iraq and France, before returning home and leading a historical revolution that overthrew Pahlavi regime.
Iran displayed its ballistic missile capabilities during Tehran rally, parading two missiles capable of reaching up to 800 kilometres.More news: 3 killed by US-led airstrike in eastern Syria
Waving Iranian flags, chanting "Death to America" and burning US and Israeli flags, hundreds of thousands of people poured out onto the streets across Iran on Monday, marking the date that's considered victory day in the country's 1979 Islamic Revolution.
Iranian state TV anchor Mehdi Khosravi chirped how he expects John Bolton, U.S. national security adviser, to be very angry on Monday since he had once predicted that Iranians will not see the 40th anniversary of their revolution.
Israeli Prime Minister Benjamin Netanyahu confirmed on Tuesday that Israel had carried out an artillery attack in Syria on Monday night. He said, "The United States does not have the courage to shoot a single bullet at us".
An Iranian man marches with a portrait of the country's Supreme Leader Ali Khamenei (L) alongside a woman holding up another of Islamic Revolution founder Ayatollah Ruhollah Khomeini (R) during a ceremony celebrating the 40th anniversary of Islamic Revolution in the capital Tehran on February 11, 2019.
"If this regime makes the very bad mistake of trying to destroy Tel Aviv and Haifa, it will not succeed", the Israeli leader said. Today, the United States, its Arab allies and Israel are trying to counter Tehran's growing influence in the Middle East, where it has proxies in Syria, Lebanon and Yemen.
State TV showed a cartoon of the Shah being thrown into the "dustbin of history", wearing clothes in US colours and holding Iranian newspapers headlined "The Shah has left!"
Cleric Hossein Firouzi told AFP Iran's revolution had achieved everything it set out to in terms of military power, political identity and scientific achievements.