Iran has begun curbing uranium enrichment under a deal which will also see international sanctions eased, says the International Atomic Energy Agency (IAEA), the UN nuclear watchdog.
Earlier, centrifuges used for enrichment were disconnected at the Natanz plant, Iranian TV reported.
The move is part of a six-month nuclear deal reached with the US, Russia, China and European powers last November.
The US and the EU have now responded by lifting some sanctions on Iran.
The suspension of sanctions for six months clears the way for Iran to resume export of petrochemicals.
Measures affecting the trade in gold and other precious metals, as well as the car industry, will also be lifted.
US estimates suggest the relief could amount to some $7bn (£4bn).
The easing of EU sanctions is expected to come into effect by the end of Monday.
However, most of the sanctions against Iran - which began in 2006 - will remain in force.
"This is an important day in our pursuit of ensuring that Iran has an exclusively peaceful nuclear programme," EU foreign policy chief Catherine Ashton told reporters in Brussels ahead of the EU foreign ministers' meeting.
But Israeli Prime Minister Benjamin Netanyahu said the agreement would not stop Iran from "realising its intention to develop nuclear weapons".
At an extraordinary parliamentary session on Monday, he warned the deal was a "fast track" to the nuclear bomb.
The session was attended by Canada's visiting Prime Minister Stephen Harper who said his country would not lift sanctions against Iran.
"The sanctions iceberg against Iran is melting," the head of Iran's Atomic Energy Organisation, Ali Akbar Salehi, said earlier as he announced a halt to uranium enrichment at the Natanz plant.
The IAEA confirmed that, as of Monday, Iran had ceased enriching uranium above 5% purity at the Natanz and Fordo facilities, according to a confidential report by its inspectors obtained by the BBC.
Iran has also begun diluting its stockpile of uranium enriched to 20%, and agreed the details of how UN inspectors will have increased access to Natanz and Fordo, the report adds.
The nuclear deal is designed to prevent Iran from developing atomic weapons. Tehran denies trying to do so, saying its nuclear programme is solely for peaceful purposes.
The terms of November's deal were hammered out between Iran and the five permanent members of the UN Security Council - the US, Russia, China, Britain and France - plus Germany, in Geneva.
The agreement followed months of secret talks between Iranian and US officials.
It is designed to provide breathing space while a more permanent deal can be reached.
Sounding a note of caution, former IAEA deputy director Olli Heinonen said that if Iran decided to renege on the deal, it would only need two to three weeks to produce enough highly enriched uranium for a nuclear weapon.