The powerful magnitude 7.8 earthquake hit just before 4 pm local time on Tuesday, killing more than 30 people. The epicenter was in southeast Iran in an area of mountains and desert.
"It was the biggest earthquake in Iran in 40 years and we are expecting hundreds of dead," an Iranian official said, who spoke on condition of anonymity.
Local media reported that up to 1,000 mud homes were damaged. There have also been reports of flattened homes and offices on both sides of the Iran-Pakistan border.
A state of emergency was declared in Saravan, Iran and evacuations have been ordered across the Gulf.
Iran's Red Crescent said it was facing a "complicated emergency situation."
Tremors were felt in southern Pakistan, including the city of Karachi, and across Balochistan province from Gwadar on the southern coast to Quetta and the border with Iran.
According to witnesses, tall buildings shook in India's capital New Delhi, sending people running into the streets.
Carrieann Bedwell, a USGS seismologist, said a 7.8 magnitude earthquake was "a large event for any area" and could be expected to cause damage in inhabited places.
Aftershocks can also be expected for days or weeks after a quake of the magnitude, she said.
This quake comes less than a week after a deadly earthquakquake killed at least 37 people in Iran.
The magnitude 6.1 earthquake struck the town of Kaki, some 90 km southeast of Bushehr.
With files from CNN