BBC Persian TV, which launches next week, will be beamed into Iran via two satellites. It will run for eight hours a day with a mix of news and cultural programmes.
A of the journalists will be based in London, and Iran has withheld permission for the service to launch.
Speaking to The Times a spokesman for the Iranian embassy in London said: "We believe the service to be illegal."
This situation is not unique for the BBC, which has had its BBC Farsi service partially blocked in the country since the government asked local internet providers to stop carrying it two years ago.
The radio service still attracts 2.5m listeners every week despite limited reach.
It is believed around 40% of Iran's 70m population are able to receive satellite broadcasts. The BBC says it will be able to provide coverage of events such as the upcoming inauguration of President elect Barack Obama, which currently receive minimal coverage.
One hundred and fifty staff have been recruited to work on the channel, including 100 journalists. They won't be allowed into Iran to cover local news although BBC News does have a correspondent in Tehran.
Speaking of Iran's reaction to the channel BBC World Service director Nigel Chapman said he was optimistic there would eventually be co-operation between the two.
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