She said Iran was determined to develop nuclear weapons, was the “central banker for terrorism” in the Middle East and was a block to democracy.
Her comments to a Congressional hearing in Washington came as Iran vowed to resist international pressure over its nuclear programme.
Iran insists it has the right to civilian nuclear technology.
It denies accusations from the US and EU that it is seeking to develop nuclear weapons.
Sanctions threat
Ms Rice said: “We may face no greater challenge from a single country than from Iran, whose policies are directed at developing a Middle East that would be 180 degrees different than the Middle East that we would like to see develop.”
Ms Rice said Iran seemed determined “to develop a nuclear weapon in defiance of the international community”.
She added: “Iranian support for terrorism is retarding, and in some cases, helping to arrest the growth of democratic and stable governments [in the Middle East”>.”
Earlier, Iran’s supreme leader, Ayatollah Ali Khamenei, said his country would continue its drive towards mastering nuclear technology.
“The Iranian people and the officials of the Islamic republic of Iran, more powerful than before and like steel, will stand against any pressure or conspiracy,” he said.
A report written by the International Atomic Energy Agency has been forwarded to the UN Security Council.
The document, leaked to the media last week, says the Iranians have begun feeding uranium gas into centrifuges, a first step in a process that can produce fuel for nuclear reactors or bomb material.
The Security Council is expected to discuss the issue as early as next week.
The council has the power to impose sanctions, but it is not clear that all its key members would back them.
