"Iran is going to be one of our biggest challenges," Obama said in an interview with ABC's "This Week with George Stephanopoulos."
Obama said he was concerned about the Islamic republic's support of the Lebanese Shi'ite movement Hezbollah and about Iran's nuclear enrichment, which he said could trigger a Middle East arms race.
In a shift from President George W. Bush's policies, Obama has said he would seek much broader engagement with Iran.
"We are going to have to take a new approach. And I've outlined my belief that engagement is the place to start," he said.
Obama, who takes office as president on Jan. 20, said that approach would include "sending a signal that we respect the aspirations of the Iranian people but that we also have certain expectations in terms of how an international actor behaves.
"We are in preparations for that. We anticipate that we're going to have to move swiftly in that area," Obama said.
Washington accuses Tehran of seeking a nuclear weapon but Tehran insists its nuclear program is for the peaceful purpose of generating electricity.
Obama has said he was prepared to offer Iran economic incentives to stop its nuclear program but he also HAS said sanctions could be toughened if it refused. (Reporting by Caren Bohan; Editing by Bill Trott)
