The Iranian ambassador to Australia Ahmad Sadeghi had been expelled and Australia's mission in Tehran closed, with diplomats moved to a third country and operations suspended, Prime Minister Anthony Albanese said.
It's the first time Australia has expelled an ambassador since World War II.
Mr Albanese said an investigation from the Australian Security Intelligence Organisation provided "credible intelligence" to conclude Iran directed attacks against Melbourne's Addas Synagogue and Sydney's Lewis Continental Kitchen.
The synagogue was firebombed in December 2024 and the kitchen was hit with an arson attack in October the same year.
"ASIO assesses it's likely Iran directed further attacks as well," Mr Albanese said alongside the federal police commissioner, ASIO director-general and home affairs and foreign ministers in Canberra on Tuesday.
"These were extraordinary and dangerous acts of aggression orchestrated by a foreign nation on Australian soil.
"They were attempts to undermine social cohesion and sow discord in our community."
ASIO director-general Mike Burgess said the organisation investigated dozens of incidents and determined there were links between the alleged crimes and commanders in the guard corps.
"The IRGC used a complex web of proxies to hide its involvement," he said.
"ASIO is still investigating possible Iranian involvement in a number of other attacks, but I want to stress we do not believe the regime is responsible for every act of anti-Semitism in Australia."
Iran's Islamic Revolutionary Guard Corps will be listed as a terrorist organisation once urgent legislation passes parliament.
Australia's criminal code makes it an offence to provide support to a listed terrorist organisation.
But the government hadn't previously listed the Revolutionary Guard under existing terrorism laws because it was a government entity, meaning urgent laws are being drafted to list it.
The attacks weren't directed through the Iranian embassy in Australia but by the Revolutionary Guard through overseas actors, including organised crime groups, Mr Burgess said.
"They tap into a number of people, agents of IRGC, and people that they know in the criminal world, and work through there, so it's a series of chains," the ASIO boss said.
"There's an organised crime element offshore in this.
"But that's not to suggest organised crime are doing it, they're just using cut-outs, including people who are criminals and members of organised crime gangs, to do their bidding or direct their bidding."
NSW Premier Chris Minns said "the revelations about Iran and its proxies involvement in directing violent, anti-Semitic attacks on Australian soil are deeply disturbing and utterly unacceptable".
"Any act of hatred, including anti-Semitism is unacceptable and undermines the harmony of our society," he said.
"I welcome the decisive action taken by the Commonwealth government."
Israel's embassy in Australia also welcomed the action.
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