The successful launch and return will further stoke fears that the technology could be used to deliver a nuclear warhead.
"If you can show that you are able to protect a vehicle of this sort from re-entry, then you can probably protect a military warhead and make it survive the high temperatures and high pressures of re-entering," Mr Gruselle said.
The monkey launch would be similar to sending up a satellite weighing some 2,000kg, he said. Success would suggest a capacity to deploy a surface-to-surface missile with a range of a few thousand kilometres.
The Defence Ministry announced the launch as world powers sought to agree a date and venue with Iran for resuming talks to resolve a standoff with the West over Tehran's nuclear programme before it degenerates into a new Middle East war.
Efforts to nail down a new meeting have failed repeatedly and the powers fear Iran is exploiting the diplomatic vacuum to hone the means to produce nuclear weapons.
The Islamic Republic denies seeking weapons capability and says it seeks only electricity from its uranium enrichment so it can export more of its considerable oil wealth. The powers have proposed new talks in February, a spokesman for the European Union's foreign policy chief said hours after Russia urged all concerned to "stop behaving like children" and commit to a meeting. The Defence Ministry said the launch of the monkey coincided "with the days of" the Prophet Mohammad's birthday, which was last week, but gave no date. The launch was "another giant step" in space technology and biological research "which is the monopoly of a few countries", the statement said.
The small grey monkey was pictured strapped into a padded seat and being loaded into the Kavoshgar rocket dubbed "Pishgam" (Pioneer) which state media said reached a height of more than 120km.
"This shipment returned safely to Earth with the anticipated speed along with the live organism," Defence Minister Ahmad Vahidi told the semi-official Fars news agency. "The launch of Kavoshgar and its retrieval is the first step towards sending humans into space." There was no independent confirmation of the launch.
Michael Elleman, a missile expert at the International Institute for Strategic Studies, said Iran had demonstrated "no new military or strategic capability" with the launch.