Hezbollah was created at the initiative of Iran's Revolutionary Guards during the Lebanese civil war after Israel overran the capital Beirut in 1982.

It is a key ally of Tehran and has supported Iran-backed groups in Syria, Iraq and Yemen.

In a televised speech, Hezbollah chief Hassan Nasrallah slammed Monday's designation by the United States.

"This is the height of insolence and foolishness," he said.

Washington's move to blacklist the Islamic Revolutionary Guard Corps marked the first time the US has branded part of a foreign government a terrorist group.

"We condemn, denounce and rebuke this decision," Nasrallah said.

The Revolutionary Guards are the ideological arm of Iran's military and deeply embedded in the country's political and economic life.

In recent years the unit has been active in Iraq and Syria, officially as "military advisors".

Nasrallah on Wednesday lauded the elite military force, saying it "did not only provide financial and moral support" to its regional allies, but also sacrificed its "best commanders, officers and fighters" to battles outside of Iran.

"After the Americans put all groups and movements of the resistance on terror lists... they want to reach the primary and central power which is the Revolutionary Guards," Nasrallah said.

Hezbollah has been designated a terrorist organisation by the US since 1997.

Nasrallah said his movement and other Iranian-backed groups will not respond to the decision with force, but threatened escalation if more measures are taken against Iran or its allies in the region.

"Condemnation will suffice for now," he said. "But this does not mean we don't have stronger cards to play," he said, without specifying.

"This is not a permanent policy."