"Due to the drop in the Karkheh Dam reservoir level, its power plant's units were removed from the production circuit," Amir Mahmoudi, the head of the dam and its power plant said, according to state news agency IRNA.
He added that the water was subsequently released from the lower valves of the dam to meet the needs of people living downstream.
He said that the reservoir behind the dam is currently holding about one billion cubic metres of water, adding that "the current water level is 180 meters, which is 40 meters lower than the natural operating level" for electricity production.
The Karkheh Dam is one of the biggest earthen dams in the world and the largest in Iran and the Middle East, according to IRNA.
Built on the Karkheh River, it is located 22 kilometres (14 miles) northwest of the city of Andimeshk in the southwestern province of Khuzestan.
The development comes as the country faces one of its most severe droughts since records began six decades ago.
Iranian media have in past weeks reported that precipitation levels had decreased by about 90 percent this year, compared with the long-term average.
Water levels at reservoirs supplying many provinces have fallen to record lows, with residents holding prayers for rain in different cities over the past several weeks.
Iranian authorities have also launched cloud seeding operations to induce rainfall and resorted to cutting off water supplies periodically to manage consumption.
Iran, a largely arid country, has for years suffered chronic dry spells and heat waves, which are expected to worsen with climate change.
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