Iran's ambassador to Tirana and another diplomat have been thrown out of Albania for "threatening the security of the country," officials say.
Precise reasons for the expulsion were not given.
However, US officials praised the decision and said it sent a clear message that conducting "terrorist operations in Europe" was unacceptable.
Iran blamed Israel and the US for putting pressure on Albania, adding it had respected Albanian laws.
"This unjustifiable behaviour of the Albanian government... is completely based on false and fabricated intelligence and is unacceptable and condemned," said the foreign ministry in Tehran.
The ambassador's name was not given but was widely reported to be Gholamhossein Mohammadnia.
What has Albania said?
The foreign ministry said the decision to expel the two diplomats had been taken with "ally countries" because of the pair's "activities in violation of their diplomatic status".
It was not clear when the pair had been expelled, but the official told the Associated Press that it followed talks with other countries including Israel.
When asked by the BBC to clarify the reason for the decision, the foreign ministry declined to say.
US Secretary of State Mike Pompeo made clear that the men were implicated in plotting "terrorist attacks", while President Donald Trump wrote a letter congratulating Albania's prime minister.
We commend the Government of #Albania for taking action against #Iran’s regime for its terrorist plotting on Albanian soil, threatening European security. Letter from President Donald Trump thanking the Government of Albania: https://t.co/dOgW9jaK4k pic.twitter.com/Olt2tcLPxR— USEmbassyTirana (@USEmbassyTirana) December 20, 2018
One unconfirmed Albanian report suggested the expulsions were linked to a last-minute decision to move a 2016 World Cup qualifying tie against Israel from the northern city of Shkodra for security reasons. Nineteen people were detained in Albania and Kosovo at the time and police said explosives were found.
Another unconfirmed report linked the move to threats to exiled Iranian group Mujahideen-e Khalq (MEK), which backs the overthrow of the Islamic republic. At least 2,000 members of MEK have moved from Iraq to Albania in the past few years.
In October, Iran became involved in a separate diplomatic spat with Denmark, when the government in Tehran was accused of planning to assassinate an Iranian activist on Danish soil.
The alleged target was purported to be a senior member of another militant opposition group.