The satellite, reportedly capable of taking clear photographs of objects on the ground as small as 70cm (2ft), was sent into space from eastern Russia.
The device needs several days before it can begin operating, an official said.
Iran’s president has often called for Israel’s destruction but the government in Tehran denies Israeli and US claims that it is building a nuclear bomb.
Iran says its nuclear programme is purely intended to produce energy.
Israeli Defence Minister Shaul Mofaz said on Monday that Tehran’s nuclear programme posed the biggest threat to Jews since the Nazi Holocaust.
Spy camera
Speaking on Tuesday, Mr Mofaz said the Eros-B satellite would make it easier for Israel to gather intelligence from further afield.
The satellite was launched from a Russian military site in the country’s far eastern Amur region, a spokesman for the site told the Itar-Tass news agency.
Shimon Eckhaus, from the ImageSat International firm which helped manufacture the satellite, told the Reuters news agency: “Everything has gone completely to plan.”
He told the agency the satellite’s camera could spot objects on the ground that were 70cm (2ft) across in length, or were at least that distance apart.
“The satellite covers every square kilometre worldwide, including Iran,” Mr Eckhaus said.
ImageSat is part-owned by the state-owned Israel Aircraft Industries.
Iranian president Mahmoud Ahmadinejad recently described Israel’s existence as “an injustice and by its very nature a permanent threat”.
“Whether you like it or not, the Zionist regime is on the road to being eliminated,” he said.