The quake, measured 7.8 on the Richter scale, damaged hundreds of mud-built buildings in remote southwestern Pakistan, killing at least 34 people according to initial reports.
Crisis management authorities have declared a state of emergency in the quake-hit area, Iran's official news agency IRNA said, but so far there have been no confirmed deaths on the Iranian side.
In Pakistan, the military has mobilised to help the relief effort after the quake brought down homes in the Mashkail area in Baluchistan province.
Two military helicopters carrying medical teams have been sent to the area, which lies just a few kilometres from the Iranian border, while paramilitary troops were being moved to supplement the relief efforts.
"At least 34 people have been killed and 80 others wounded in Mashkail," a local government official told AFP.
"The bodies are at the hospital and injured are being treated by army doctors. Paramilitary forces are busy in rescue work."
Tremors were felt across Pakistan, shaking buildings in Islamabad and prompting many to flee into the streets of the biggest city Karachi in terror.
A local health official in Iran told the Fars news agency that more than 20 villages were probably "severely damaged", based on initial reports.
At least 27 people were hurt in Iran, according to a local governor speaking to IRNA, but there was no immediate confirmation of any deaths.
The head of Iran's Red Crescent rescue corps, Mahmoud Mozafar, said communications to the stricken areas have been cut.
The quake struck at 3:14 pm Iranian time (1044 GMT) with its epicentre around 80 kilometres (50 miles) east of the Iranian city of Khash, in the province of Sistan Baluchistan, the US Geological Survey said, at a depth of 82 kilometres.
There have been conflicting reports of the precise magnitude. Iran's Seismological Centre measured it as 7.5 and gave the depth as 95 kilometres.
Iran sits astride several major fault lines and is prone to frequent earthquakes, some of which have been devastating.
A double earthquake, one measuring 6.2 and the other 6.0, struck the country's northwest last August, killing more than 300 people and injuring 3,000.
In December 2003, a massive quake struck the southern city of Bam. It killed more than 26,000 people -- about a quarter of the population -- and destroyed the city's ancient mud-built citadel.
Dr David Rothery, chair of the volcanoes, earthquakes and tsunamis course at Britain's Open University, said the depth of Tuesday's quake would have lessened its impact.
But he added that the area "is mountainous, and damage can be expected from landslides as well as because of poorly constructed buildings".
Across the Gulf the quake shook buildings in Abu Dhabi and Dubai and was also felt in the Saudi capital Riyadh and in Oman.
In Dubai, residential and office buildings were evacuated and thousands of people gathered outside skyscrapers.
"Everybody's on the streets. There's a state of panic," said the director of an insurance company in the city centre who identified himself only as Rami.
The grandiose Dubai Mall was completely evacuated, according to employees who said people were also cleared from towers in Downtown Dubai, home to the world's tallest building.
The quake was also felt strongly in Kuwait, particularly in coastal areas, and in the Bahraini capital Manama, where buildings in the central financial district were evacuated.
In the Indian capital New Delhi tremors rattled buildings and led many office workers to run into the street as a precaution.
"We felt the jerks," said SC Basu, a retired government engineer who lives in the east of the city. "Our beds shook and crockery rattled. Many people left for outside."