"It is a surprise that Bahraini authorities still insist on repeating baseless and fruitless claims and accusing the Islamic republic of Iran," the state-run Iran Daily quoted foreign ministry spokesman Bahram Ghasemi as saying.
The Bahraini interior ministry said on Sunday that security forces had dismantled a 14-member "terrorist" cell that had received training from Iran's Revolutionary Guards and an Iran-backed Shiite militia in Iraq.
It said two Bahrainis suspected of financing and supervising the group had fled to Iran.
They have since dissolved the main Shiite opposition movement and sentenced many of its leaders to long jail terms, some on "terror" charges.
Ghasemi said Bahrain's "delusional" government should focus on ending "the crackdown and arrest of religious leaders, and grant freedom of speech" to its people.
The crackdown has drawn criticism from Western governments as well as human rights groups, but Bahrain's strategic position across the Gulf from Iran makes it a key ally and the kingdom is home base to the US Fifth Fleet.
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