Acting on the instructions of a senior figure in Iran's missile programme, prosecutors said the two men, identified as Mohsen A., 52, and Behzad S., 49, had acquired a vacuum sintering furnace for 850,000 euros from a German firm.
In breach of Germany's foreign trade law, they exported the furnace — which is used to shield warheads from heat — to Iran, then contracted the manufacturer to assemble it for them.
"Both of the accused knew that the machinery was to be used for the Iranian missile programme," prosecutors said.
Behzad S., who holds German and Iranian citizenship, was used as a go-between in the operation, they added.
As it began assembly in Tehran in 2008, the German firm that made the furnace discovered that a company owned by the 52-year-old was suspected of working for the missile programme. It then stopped the work so the furnace could not be used, prosecutors said.
Western powers suspect Iran of trying to develop nuclear weapons, though prosecutors made no explicit reference to this. Tehran denies it is attempting to develop atomic weapons.
Mohsen A., has been in police custody since October last year, but the younger man is still at large, prosecutors said.
A number of goods with military applications have been subject to Germany's export ban to Iran since April 2007, among them vacuum sintering furnaces, they added.
(Writing by Dave Graham; editing by Noah Barkin)
