"The present economic crisis is due to the capitalist system. The world needs radical change," Ahmadinejad told a one-day economic summit of the Organisation of the Islamic Conference (OIC).
Describing interest rates as the biggest and most fundamental problem of the capitalist system, the Iranian leader said through a translator: "The world system based on usury has collapsed, proving its failure."
"We have to draw up programmes based on Islamic economic thinkers. That way we can guide people to happiness, security, justice and honesty," he told participating leaders, including Syrian President Bashar al-Assad and Afghan President Hamid Karzai.
Ahmadinejad made no reference to Tehran's dispute with the West over its nuclear activities, but his presence in Istanbul coincides with international pressure on Iran to agree to a UN-brokered plan to provide Iran with enriched uranium for a Tehran reactor.
Under the proposals thrashed out in talks with France, Russia and the United States, Iran would ship most of its own stocks of low-enriched uranium abroad in return for fuel to power a research reactor in Tehran.
The proposals were designed to assuage fears that Iran could divert some of its uranium and further enrich it to reach the higher levels of purity required to make an atomic bomb.
World powers have endorsed the plan but Iran, which insists its nuclear programme is peaceful, has yet to give a final response.
Turkish President Abdullah Gul, whose country is nurturing closer ties with neighbouring Iran, expressed hope for "concrete and positive" results on the proposal package and said Ankara was ready to help.
"Turkey will continue to strongly support the process to find a diplomatic solution to this issue and play a facilitative role," he said in his opening remarks.
A top US official said Monday that Washington wanted to give Tehran "some space" in the negotiations on the proposals, a day after Iran's chief nuclear negotiator Saeed Jalili said he wants to reach agreement "as quickly as possible".
"We are in extra innings on these negotiations," Washington's envoy to the International Atomic Energy Agency, Glyn Davies, told reporters in Vienna. "We want to give Iran some space. It's a tough decision."
His comments coincided with a report in the New York Times that Iran had ignored US proposals to send stockpiles of enriched uranium to any of several nations, including Turkey, for safekeeping.
Instead, the Iranians have revived an old proposal that calls for international arms inspectors to take custody of much of Iran's fuel, but keep it on Kish, a Persian Gulf resort island that is part of Iran.
Members of the US administration said they had now all but lost hope that Iran would follow through with an agreement to send its fuel out of the country temporarily, the newspaper said.
Turkey, a NATO member, has in recent years pushed for closer ties with Iran, Sudan and Syria, raising concerns that the country is turning its face to the East.
A sharp downturn in Turkey's relations with chief regional ally Israel over last New Year's war in Gaza has further fuelled concerns over Turkey's future direction.
After a visit to Iran last month marked by the signing of bilateral partnerships on trade and energy, Turkey's Prime Minister Recep Tayyip Erdogan firmly denied that his country was shedding its pro-Western outlook.
But he has accused the West of treating Iran unfairly over its nuclear programme — earning praise from Ahmadinejad — and argued that efforts to rid the Middle East of nuclear weapons must also focus on Israel, the region's sole but undeclared nuclear power.
