Speaking to the World Economic Forum, Cheney cited the spread of democracy in the Middle East and beyond as a key element of the fight against global terrorism.
He called on Iran's conservatives, locked in a dispute with the reformist government over eligibility for next month's parliamentary elections, to "follow the example" of other Middle East states seeking democratic reform.
"We call for the Iranian regime to honor the legitimate demands of the Iranian people," Cheney said. "There are growing calls for true democracy and human rights."
Cheney also welcomed the talks Iran conducted with European countries last year on its nuclear program which Washington alleges is aimed at building a nuclear bomb.
"We'll have to see whether this produces the desired results," he said, adding that Tehran had in the past "been aggressively pursuing efforts" to acquire weapons technology.
Tehran, which denies plans to develop nuclear arms, agreed last year to suspend uranium enrichment and boost its cooperation with the International Atomic Energy Agency (IAEA).
"It's in everybody's interest to ensure that the Iranians live up to the commitments they have made," Cheney said.