The top military officer in the United States believes Iran has a stockpile of enough nuclear fuel to make a bomb.
The statement by Admiral Mike Mullen on Sunday was the first time the US has issued such an assessment.
He told CNN that Iran having a nuclear weapon was a "very, very bad outcome for the region and for the world."
The admiral's remarks followed a report by the International Atomic Energy Agency which said Tehran had made major strides in uranium enrichment.
According to the United Nations agency, Tehran now has 1,010kg of low-enriched uranium hexafluoride from its enrichment activities at a plant at Natanz.
Citing the report, some analysts say Iran may have sufficient material to make a nuclear bomb or may be close to that point.
Iran denies its atomic work is designed to build a nuclear arsenal and says it wants to develop nuclear technology to generate domestic electricity.