Key Afghan-Iranian highway opens
It is estimated the $60m Dogharun-Herat road, paid for by Iran, will carry over half of Afghan imports and exports.
The highway has been called a modern day "silk route" and it is hoped it will eventually link the whole of Asia.
Afghanistan's illegal drugs trade and its leaders' close ties with the US have tested relations with
Afghan President Hamid Karzai's visit to Iran to inaugurate the road and a power line is his first official trip since being elected last year.
"This is a very important step on the way to Afghanistan's reconstruction," he said at a ceremony on at Dogharun on Iran's eastern frontier.
The help of Iran is written in gold
Afghan President Hamid Karzai
Iranian President Mohammad Khatami said he wanted a "stable, dignified" Afghanistan.
"I believe our security is Afghanistan's security," he said.
"Our stability and Afghanistan's stability are linked. Our progress and development is linked to Afghanistan's development."
Iran's Revolutionary Guards built the 120-km (75-mile) highway to the Afghan city of Herat.
According to one of the engineers, interviewed by the Iranian state news agency, it was finished six months ahead of schedule.
The road is said to have police stations, rest stops and 24 car parks to accommodate the heavy traffic that is expected.
Iranian officials estimate that 60% of Afghanistan's imports and exports will travel on the road.
The BBC's Frances Harrison in Tehran says President Karzai's trip is mainly about business ties, but talks on Iran's repatriation of Afghan refugees are also likely.
The United Nations has accused Iran of exerting undue pressure on Afghans to make them go home, and has threatened to suspend its refugee programme in Iran.