It promised "full cooperation" with the UN's nuclear watchdog and agreed to suspend uranium enrichment, while reserving the right to resume the process if it deemed necessary.
Here is a list of major developments in the diplomatic crisis over Iran's nuclear programme:
Dec 13 - The United States accuses Iran of launching a secret nuclear weapons programme, publishing satellite images of two sites under construction in the towns of Natanz and Arak. Iran denies any military purpose behind its nuclear activities and agrees to IAEA inspections.
Feb 21 - International Atomic Energy Agency chief Mohamed ElBaradei arrives in Iran to carry out inspections at Iran's nuclear sites.
Feb-May - The UN watchdog carries out a series of inspections in Iran, while Tehran maintains that its nuclear sites are designed purely to provide nuclear fuel for future power plants.
June 16 - EU foreign ministers and ElBaradei call on Iran to allow tougher nuclear inspections, as a report by the IAEA chief says Tehran failed to report nuclear activities, including the purchase of uranium.
June 19 - The IAEA calls on Iran to allow stricter, unconditional inspections of its nuclear facilities, but senior Iranian officials reject the demand.
July 9 - ElBaradei fails to obtain agreement on an immediate start to inspections during talks in Tehran, but Iranian authorities agree to further talks on the issue.
July 19 - An IAEA team begins a fresh round of inspections as the Washington Post newspaper reveals that UN nuclear experts had discovered traces of enriched uranium -- which can be used to make weapons -- at a plant in Natanz during earlier checks.
July 21 - The European Union warns it may review its relations and economic ties with Iran unless Tehran cooperates fully with the IAEA.
Aug 4 - IAEA experts begin fresh talks with Iran on snap inspections
Aug 6 - Iranian President Mohammad Khatami says nuclear weapons have no place in his country's political or military strategy.
August 26 - ElBaradei confirms that inspectors at the Natanz facility had found traces of highly enriched uranium -- whose usefulness for non-military purposes is questioned by the agency. Iran agrees to negotiate on a draft protocol allowing surprise inspections but says inspectors will not be given complete freedom of movement.
August 30 - EU foreign policy chief Javier Solana holds talks with Iranian Foreign Minister Kamal Kharazi, warning Tehran: "If you don't sign the protocol it will be a bad news for you."
Sept 8 - ElBaradei issues a fresh call on Tehran to "clarify all isues" relevant to its nuclear programme and agree to snap inspections, as the IAEA opens a high-level meeting on Iran.
Sept 9 - Washington says Tehran is in "non-compliance" with international non-proliferation accords, but agrees to support a proposal by Britain, Germany and France to give Tehran until October 31 to fully disclose its nuclear activities and allow surprise inspections of all sites by UN inspectors.
Sept 10 - Iran threatens to end cooperation with the IAEA, as South Africa introduces a rival proposal urging Iran to meet its nuclear obligations but setting no deadline for compliance.
Sept 25 - IAEA inspectors find new traces of enriched uranium, but are unsure whether they were produced in Iran.
Oct 2 - IAEA experts begin a new round of talks with Iranian officials ahead of another series of inspections.
Oct 6 - Tehran expresses its good faith, announcing its intention to comply with certain demands of the ultimatum.
Oct 14 - An Iranian opposition group claims in Vienna that Iran has built a uranium-enrichment facility in Isfahan for military purposes.
Oct 18 - IAEA and Iranian experts begin discussions leading toward an eventual signature of the protocol.
Oct 21 - The foreign ministers of Britain, France and Germany receive a commitment from Tehran for "total transparency" over its nuclear activities.