Canada says it is suspending diplomatic relations with Iran, closing its embassy in Tehran and expelling all Iranian diplomats from Canada.
Foreign Minister John Baird said Friday his government "views the government of Iran as the most significant threat to global peace and security in the world today."
He said Iranian diplomats in Canada must leave within five days.
Baird gave several reasons for the decision, including Iran's nuclear program, its military assistance to Syria, and its hostility toward Israel. He also said Iran is a state sponsor of terrorism.
"It shelters and materially supports terrorist groups. The government of Canada is formally listing Iran today as a state sponsor of terrorism under the Justice for Victims of Terrorism Act," said Baird.
Reports also say a note written in Persian has been posted on the door of the Iranian embassy in Ottawa, saying the embassy is closed because of the "hostile" decision by the government of Canada.
Israeli Prime Minister Benjamin Netanyahu praised Canada's decision, calling it a bold leadership move which he said sends a strong message to the entire world.
The U.S. State Department said it shares Canada's concerns about Iran's behavior. Spokesman Patrick Ventrell said the United States wants all countries to join it in isolating Iran.
In explaining Canada's decision, Baird also said he was worried about the safety of diplomats in Tehran after Britain's embassy there was stormed by protesters last November.
Canadian officials say diplomats in Iran have already left the country.