Iran has "almost completed preparations" to begin 60% uranium enrichment, according to the United Nations' nuclear watchdog.
The International Atomic Energy Agency says Iran will activate 1,024 more IR-1 centrifuges, the country's older first generation centrifuges, at the Natanz nuclear plant.
This is in response to weekend sabotage of its Natanz nuclear facility, which it blamed on Israel.
"Enabling IR-6 (centrifuges) at Natanz, or bringing enrichment to 60%: this is the response to your malice," President Hassan Rouhani said in televised remarks.
"What you did was nuclear terrorism. What we do is legal."
Iran announced the addition of 1,000 new centrifuges to the damaged Natanz facility, where the purified material produced will be used for medical purposes.
Israel has not responded to the latest Iran accusations but has repeatedly stated it believes Iran is using its nuclear program as a cover for military purposes.
During a news conference with visiting U.S. Defense Secretary Lloyd Austin on Monday, Israeli Prime Minister Benjamin Netanyahu singled out Iran: "In the Middle East, there is no threat that is more serious, more dangerous, more pressing than that posed by the fanatical regime in Iran."
Iran has publicly stated that it does not want to be a nuclear weapon-capable power.
While the uranium enrichment level of 60% will be at the country's highest, it is still well below the threshold of weapons-grade enrichment.
Iran and Israel have a long history of tensions stemming from religious, political and ideological differences. In recent years, tensions in the Middle East have risen due to differing perspectives on security, with Israel serving as the region's sole nuclear power.
It is not the first time that Israel has been blamed for events at Natanz. Several Iranian officials blamed Israel for last year's fire at the facility, which was caused by cyber sabotage. In 2010, it was widely assumed that the U.S. and Israel used a computer virus called Stuxnet to attack the facility and cause centrifuges to crash.
The U.S. and Israel, a long-term ally, have previously worked together to thwart Iran's nuclear ambitions; however, the U.S. has denied any involvement in the weekend attack.
