"The suspension is completely unacceptable and we have rejected it," foreign ministry spokesman Mohammad Ali Hosseini told reporters.
"It has no place in Iran's peaceful nuclear program."
The comments marked an unequivocal refusal from Iran to back down in the face of strong international pressure to suspend its uranium enrichment, a process which the West fears could be diverted towards making nuclear weapons.
Hosseini also expressed defiance over the prospect of sanctions, saying that Iran was well used to such measures after being subject to a US embargo since 1980.
"The greatest sanction would be for a generation to deprive its own people and future generations of nuclear technology," he said.
Representatives of the five UN Security council permanent members plus Germany agreed to discuss sanctions against Iran, on Friday.
Senior US official Nicholas Burns said the so-called "5+1" group would start drafting a sanctions resolution this week, although he admitted finding a consensus on the extent of punitive measures would be difficult.
It remains to be seen what kind of sanctions regime will be acceptable to Russia and China, who have both always insisted on the importance of a diplomatic solution to the crisis.
Alaedin Borujerdi, the head of parliament's foreign affairs committee, said any hasty measures by the West would spark "as a consequence a reaction by the parliament and national security council."
Iran's insistence on its right to enrich uranium lies at the heart of the crisis. The process can be used to make nuclear fuel and, in highly extended form, the fissile core of an atomic bomb.
Iran insists its nuclear program is solely for peaceful energy needs, rejecting allegations that it is seeking to manufacture nuclear weapons.