Brigadier Gen. Mohammad Pakpour launched the military exercise with a speech saying Iran had no intention to start a war, but "our reaction would be fast" to any attack, the state-run IRNA news agency reported.
A day earlier, senior parliamentarian Mohammad Hossein Farhangi told the Fars news agency any attacks on the country's nuclear facility would "receive a crushing response from Iran."
Farhangi said Israel is bluffing about eliminating a perceived nuclear threat.
"The occupied territories are within the range of the Islamic Republic's missiles and therefore the Zionist regime (of Israel) cannot engage in any military activity against Iran," he said.
Farhangi also taunted Israel's military history, suggesting Israel had lost a 33-day war with Lebanon and the 22-day war with Hamas Palestinian militants.
Iran has warned it would barricade the Strait of Hormuz, a critical shipping route for Middle East oil if any attacks were launched on its nuclear plant.
The country denies it is developing nuclear weapons and maintains the Bushehr atomic facility is only for electrical power production.