Russia has agreed to build up to eight nuclear reactors in Iran, 12 days before a deadline for a deal to curb Iran's nuclear activity.
The deal agreed by Russia and Iran envisages the construction of two reactors, with scope for a further six.
World powers including Russia have been pressing Iran to curb its activity amid fears it wants to build a bomb.
Diplomats are due to meet for a final round of talks next week. It is unclear what impact the Russian deal will have.
Six world powers - the US, the UK, France, Germany, Russia and China - are seeking to persuade Iran to reduce its uranium enrichment to a level below that required to build a weapon.
They have offered to lift sanctions in exchange.
Russian Deputy Foreign Minister Sergei Ryabkov said he was "reasonably optimistic" of reaching a deal at the talks.
Analysis: Jonathan Marcus, BBC News, diplomatic correspondent
Russia's agreement to supply Iran with two further nuclear reactors at the Bushehr site, with the possibility of six more in the future, appears to run counter to Western efforts to isolate the Iranian regime.
However it may ultimately have a positive impact upon the long-running nuclear stand-off between Tehran and much of the international community.
While Russia plans to provide some assistance to Iran with the fabrication of nuclear fuel, all of the reactors - like Bushehr - will essentially use Russian-supplied fuel. All the indications are that when spent, this will be returned to Russia for re-processing.
Clearly Iran still wants to retain a significant capacity to produce enriched uranium itself.
Just how extensive this should be is one of the major points of contention in the nuclear talks between Tehran and the six major powers that are due to end later this month.
Russia's intervention may perhaps bolster the confidence of anyone in Tehran looking to make a compromise.
It is thought that Iran would want help with its civilian nuclear programme in return for submitting itself to more invasive inspections.
Russian news reports quoted Iran's nuclear chief, Ali Akbar Salehi, as saying that the agreement on building the new reactors was "a turning point in the development of relations between our countries".
Two of the reactors will be built at the nuclear facility at Bushehr. The plant and its first reactor were built by Russia and began operating in 2013.
Rosatom, the Russian state nuclear power company, said the construction would be monitored by the International Atomic Energy Agency (IAEA), a global watchdog, and will meet safeguards against weapons proliferation.
The deal leaves room for a further two reactors to be built at Bushehr and another four at a separate location.
Russia will supply nuclear fuel for the reactor and retrieve it after it has been used, according to Rosatom.
A similar mechanism - designed to stop Iran from using the fuel to build weapons - is already in place for the existing reactor at Bushehr, which was also completed with Russian help.
The latest agreement could lead to Iran constructing parts of the fuel rods used for the reactor.
A statement on the Rosatom website said Russia and Iran planned to "go into the issue" of the expediency and feasibility of "fabricating fuel rod components in Iran".
The New York Times gave more details, quoting the company as saying that zirconium-sheathed rods could be produced locally but the uranium would still originate in Russia.
Some critics of Iran's nuclear programme have argued against any transfer of nuclear technology to the country, fearing it could be used develop weapons.
Iran has dismissed Western suspicions that its nuclear programme is a cover for making a weapon, insisting that its uranium enrichment activity has a civilian purpose, intended for its energy and medical sectors.