The incident occurred between the cities of Lar and Shiraz.
There was no immediate word of injuries in the crash with police only saying that 23 passengers were killed as the bus caught fire.
The head of Irans traffic police Brigadier General Mohammad Rouyanian announced in June that the expected death toll from accidents on Irans highways for the current year stood at 31,000.
Iran’s highways are considered to be among the most dangerous in the world, with some 100,000 road-accident deaths occurring in the last five years, the equivalent of three deaths an hour.