Israel says Iranian Revolutionary Guard conducted research to damage ships, gas stations and industrial plants in several countries including Britain, the US, France and Israel.
Defense minister Benny Gantz said on Wednesday that an IRGC cyber unit called “Shahid Kaveh” was involved in the alleged project.
Britain's Sky News reported similar allegations last year, saying the Iranian embassy in London had not responded to them.
Gantz hinted that Israel -- which is widely believed to have waged cyber war against Iran's nuclear facilities and other infrastructure -- may retaliate physically against enemy hackers.
"We know who they are, we target them and those who direct them. They are in our sights as we speak - and not just in the cyber-space," he said. "There is a variety of possible responses to cyber-attacks - in and outside of the cyber-domain."
Gantz also charged the Iranian-backed Lebanese militia Hezbollah of conducting a cyber operation designed to disrupt a UN peacekeeping mission on the border between the countries.
He said "Iranian security institutions in cooperation with Hezbollah (recently) launched a cyber operation with the aim of stealing materials about UNIFIL activities and deployment in the area, for Hezbollah's use".
"This is yet another direct attack by Iran and Hezbollah on Lebanese citizens and on Lebanon's stability," he told a cyber conference at Tel Aviv University, without elaborating.
Established in 1978, UNIFIL patrols Lebanon's southern border. It is charged with monitoring the ceasefire that ended the last war between Hezbollah and Israel in 2006.
Reporting by Reuters