Philip Hammond's trip comes five weeks after Britain and five other world powers struck a deal with Iran to end a 13-year dispute over the Islamic republic's disputed nuclear programme.
He entered the embassy at noon (0730 GMT) and held a ceremony shortly afterwards in its garden with Ajay Sharma, the new charge d'affaires who will be Britain's top diplomat in Tehran.
Iran's embassy in London will also reopen today. The two countries are expected to appoint ambassadors in the coming months.
"Arrived in #Tehran. First British Ministerial visit since 2003. Historic moment in UK-Iran relations," Hammond tweeted.
European officials have been quick to visit Tehran since July 14, when the nuclear agreement with Britain, China, France, Germany, Russia and the US was announced in Vienna.
The deal will see the lifting of economic sanctions imposed on Iran, in exchange for curbs on its atomic activities.
The deal has sparked a flurry of interest from countries seeking to re-connect with the oil-rich Islamic republic, whose 78 million population is also seen as a largely untapped market for other industries.
"President Rouhani's election and last month's nuclear agreement were important milestones. I believe that we have the potential to go much further," Hammond said before his arrival.
Following the 2011 embassy attack, Britain said it could not have happened without the tacit consent of the Iranian regime at the time.
It erupted after Iran's parliament voted to expel the British ambassador and reduce trade relations in retaliation for sanctions against Iran's banking sector.
Students rampaged for hours through the diplomatic compound in downtown Tehran, tearing down the British flag, ripping up pictures of Queen Elizabeth II and trashing offices. Staff were seized by protesters.
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