The mobile system has downed at least nine 122mm Grad rockets aimed at Beersheba and the port of Ashkelon over the last few days, the first ever destroyed in mid-flight by counter-missile fire anywhere in the world.
Patriot missiles built by the U.S. Raytheon Corp. shot down Scud-type ballistic missiles during the 1990-91 Gulf war.
But until Iron Dome came along there was no way of intercepting short-range missiles like the Grads and the mortar shells that Hamas uses.
Having got the "battle tested" stamp, Iron Dome will be more attractive to potential buyers. Israel reportedly has already been negotiating with Brazil, Singapore and India.
Over the last decade Hamas has fired thousands of rockets, mainly home-made Qassam weapons into the southern Negev from Gaza. These were highly inaccurate and caused few casualties.
But over the last 2-3 years Hamas has improved the capabilities of the Qassams and acquired Soviet-designed Grads, supposedly from Iran.
They can reach cities like Beersheba, population 200,000, and Ashkelon, population 113,000, and even the outer limits of the vast conurbation around Tel Aviv.
Air Force commander Maj. Gen. Ido Nechushtan declared Iron Dome made "world history," but cautioned: "This is only the beginning and things must be kept in perspective."
Iron Dome, which cost $210 million to develop, uses small radar-guided interceptors to blow up rockets with a range of between 3 and 45 miles and are in the air for no longer than two minutes.
The systems' computer can differentiate between rockets that will hit populated area and those that will not, concentrating on those that are dangerous.
The Haaretz daily reported that as part of crew training in action, it was battery commanders who made real-time decisions on which rockets posed a danger in the recent engagements, rather than the system's computer.
Israel made its first "experimental deployment" of its only two Iron Dome batteries in late March as clashes with Hamas escalated for the first time since early 2009.
The air force, which operates Iron Dome, positioned one battery north of Beersheba, the other just south of Ashkelon.
The system made its first kill April 7 when the Beersheba battery destroyed a Grad, which has a range of up to 20 miles.
It's not clear how many rockets have been fired at these cities since April 7, but the military has said Iron Dome only engaged those whose trajectories indicated they would hit populated areas.
All those rockets were knocked out "except for one apparent glitch" and no population center was hit, the military claimed.
The deployment came only after the military appeared reluctant to put Iron Dome into action, and insisted that protecting military installations, rather than civilians, was its top priority.
The reason for the military's actions has never been made clear, although there were suspicions the generals feared Iron Dome, initially developed to protect population centers, would prove to be a flop despite successful tests.
Israel already has batteries of Arrow missiles designed to intercept Iran's Shehab-3b ballistic weapons, but the bulk of missile attacks would involve shorter range systems. Arrow-2 has been deployed since 2000.
Some military analysts believe the decision to deploy Iron Dome operationally, however "experimentally," stemmed from pressure from U.S. lawmakers that Israel's civilian populations must be protected.
It may also have been to demonstrate the system's capabilities under fire to speed up promised U.S. funding that has been delayed.
In August 2010, U.S. President Barack Obama's administration pledged $205 million toward the cost of more Iron Dome batteries.
The U.S. House of Representatives approved that, but it stalled in the Senate because of a budget dispute between Republicans and Democrats.
Israel now expects that funding to be forthcoming. Defense Minister Ehud Barak declared April 3 that "with the financial help of the Americans" Israel will deploy four more Iron Dome batteries over the next two years.
But Israeli military planners say 13-20 batteries at least are required to protect northern and southern Israel from short-range weapons like the Grad. Several million Israelis are within range of such missiles.