At the opening of a conference on supporting the Palestinians in Tehran, Mr Ahmadinejad described Israel as a "permanent threat" to the Middle East that will "soon" be liberated.
He also questioned the validity of the Nazi Holocaust against Jews in World War II.
"Like it or not, the Zionist regime is heading toward annihilation," the hardline Iranian leader said.
"The Zionist regime is a rotten, dried tree that will be eliminated by one storm."
His comments come just days after he announced that Iran had successfully enriched uranium, provoking a storm of outcry from the international community.
The US, France and Israel accuse Iran of using its civilian nuclear program to secretly build atomic weapons, however Iran has denied this.
Meanwhile the country's spiritual leader, Ayatollah Khamenei, accused the US of conspiring to put the entire region under Israeli control.
"The plots by the American government against Iran, Iraq, Syria and Lebanon aimed at governing the Middle East with the control of the Zionist regime will not succeed," Iran's all-powerful leader said.
"If, by accident, the American government saw reason, it would respect the wish of the Iraqi people to form its government, respect the Palestinian government, free the prisoners of Guantanamo and Abu Ghraib, cease the conspiracy, (and) not create tension in the Persian Gulf region," he said.
The supreme leader also issued a thinly veiled appeal for Muslim countries to help the Hamas-led Palestinian government following a decision by the US and EU to suspend aid.
"The Islamic world cannot remain indifferent and silent to tyranny," he asserted.
"Your martyrs are our martyrs; your pain is our pain," he said of the Palestinians. "Islamic nations have the duty to help you in every possible way, and help you along this blessed path."
The three-day conference is being attended by officials of Hamas, the ruling party in the Palestinian territories.
President Ahmadinejad in October provoked a world outcry when he said Israel should be "wiped off the map."
He repeated his line on the Holocaust in Friday's speech, saying: "If such a disaster is true, why should the people of this region pay the price? Why does the Palestinian nation have to be suppressed and have its land occupied?"
The land of Palestine, he said, referring to the British-mandated territory that includes all of Israel, Gaza and the West Bank, "will be freed soon".
"The existence of this (Israeli) regime is a permanent threat" to the Middle East, he added. "Its existence has harmed the dignity of Islamic nations."
Iran "could defeat US"
Meanwhile, the head of Iran's Revolutionary Guards said his country could defeat any American military action over its controversial nuclear drive, in one of the Islamic regime's boldest challenges yet to the US.
"You can start a war but it won't be you who finishes it," said General Yahya Rahim Safavi.
"The Americans know better than anyone that their troops in the region and in Iraq are vulnerable. I would advise them not to commit such a strategic error," he told reporters on the sidelines of the Palestinian conference.
"I would advise them to first get out of their quagmire in Iraq before getting into an even bigger one," he said.