The restrictions go well beyond sanctions imposed by the United Nations in June and mirror steps taken by the United States this month to apply extra pressure on Tehran to return to negotiations over its uranium enrichment programme.
The measures include widespread limits on dealings with Iranian banks and insurance companies and were accompanied by a call from EU foreign ministers for Iran to resume talks over its enrichment work, which Western powers see as a covert quest for nuclear weapons. Iran says it is for peaceful purposes only.
Diplomats conceded that the sanctions' impact will depend on steps to enforce them fully, which have been a problem in the past.
A spokesman for the Iranian foreign ministry dismissed the EU's new restrictions, saying they would not affect Iran.
"Sanctions will only further complicate the conditions and they will have no impact," Ramin Mehmanparast was quoted as saying by official news agency IRNA.
"One should think about the necessity of cooperation by all countries in resolving the global crisis."
Britain, which with France and Germany has been the heart of the push for extra Iran sanctions, welcomed the EU's move.
"The message to the Iranian government could not be clearer: the longer it refuses to talk [...] about its nuclear programme, the greater the pressure and isolation Iran will bring upon itself," said UK Foreign Secretary William Hague.
"But Iran does have a choice: Britain and the international community stand ready to engage, and still believe that the way forward on this issue is multilateral negotiation."
The extra sanctions, which also limit dealings with Iran's state shipping company and with air cargo flights, will not legally come into force until they are published in the European Union's official journal on Tuesday, diplomats said.
Perhaps the hardest-hitting element of the sanctions is the move to prohibit new investment in and technical assistance to Iran's refining, liquefaction and liquefied natural gas sectors, which are a mainstay of Iran's energy-based economy.
There is a broad clampdown on the "supply, sale or transfer of items, materials, equipment, goods and technology" that could have "dual-use" - civilian or military - purposes, including software, and curbs on financial transfers and bond sales or purchases.
Has the threat worked?
Iran is ready to return to negotiations on a nuclear fuel swap without conditions, its envoy to the International Atomic Energy Agency (IAEA) said yesterday, the official IRNA news agency reported.
Talking of a letter that Iran handed to the IAEA about the proposed nuclear fuel swap, Iran's envoy to UN agency, Ali Asghar Soltanieh, said: "The clear message of this letter was Iran's complete readiness to hold negotiations over the fuel for the Tehran reactor without any conditions."
European Union foreign affairs chief Catherine Ashton welcomed this announcement, but said she wanted to see the details first.
"As far as I can see this is to be welcomed [...] but we need to study the details," she told reporters at a news briefing after the EU had approved an extra round of sanctions against Iran over its uranium enrichment programme.
(EurActiv with Reuters.)
