After an explosion at its Natanz uranium enrichment site on Sunday blamed by Tehran on arch-foe Israel, Iran said it would begin enriching uranium at 60%, a move bringing the fissile material closer to levels suitable for a bomb.
It also said it would activate 1,000 advanced centrifuge machines at the site.
"Of course, the security and intelligence officials must give the final reports, but apparently it is the crime of the Zionists, and if the Zionists act against our nation, we will answer it," Rouhani said in a televised cabinet meeting.
"Our response to their malice is replacing the damaged centrifuges with more advanced ones and ramping up the enrichment to 60% at the Natanz facility."
Iranian authorities have described the incident as an act of “nuclear terrorism”.
Israel, which the Islamic Republic does not recognize, has not formally commented on the matter.