On Thursday morning, an explosive-laden vehicle attacked the police headquarters in Chabahar, killing two sentries and injuring a number of other people, including passersby.
Immediately after the bomber detonated the auto bomb, gunmen attempted to storm the police headquarters but were killed by security forces, Iranian media reported.
The governor of Sistan-and-Baluchestan Province, Rahmdel Bamari, told the IRNA news agency that four people had been killed and many others injured.
"The terrorists exploded a vehicle carrying explosives at the gate of the [police] headquarters", Bameri was quoted as saying by the official government news agency IRNA.
State authorities did not identify who was behind the attack.
He was referring to the capture, trial and subsequent execution in June 2010 of Abdolmalek Rigi, the leader of militant group Jundallah who had waged a deadly insurgency in Sistan-Balochistan.
TV also reported shooting in the area, which is located in the mainly Sunni province of Sistan-Baluchestan that has always been plagued by unrest from both drug smuggling gangs and separatist militants.
Videos posted on Twitter, purportedly from Chabahar, showed thick smoke rising from the area.
The television said several people were also wounded in the terrorist attack.
Arab separatists and the Islamic State group both claimed responsibility for the attack.
Pakistan became the first country to condemn the terror attack, with its Foreign Ministry spokesman, Mohammad Faisal, calling for "concerted efforts" to uproot terrorism and prevent its spread.
While rare, Iran has been targeted in recent years by militant attacks.
Meanwhile, Iranian Foreign Minister Mohammad Javad Zarif claimed that those behind the attack were backed by foreign countries and would be brought to justice. "There can be no justification for any act of terror", an MEA statement said.
Chabahar Port, which is being developed with funding from India, has been described as India's "golden gateway" that will help boost trade links to land-locked Afghanistan and central Asia, while bypassing its regional rival, Pakistan.