"During the carrying out of a death sentence, family members of a convict launched a grenade attack in Ilam central prison which led to the injuries," the official IRNA news agency quoted the western province's police chief, Colonel Ali Dolati, as saying.
Dolati said that prison staff were among the injured.
He said that security personnel overpowered and arrested the assailants before they could detonate a second hand grenade.
IRNA reported that the hanging then went ahead of the prisoner, who had been convicted of murder.
It ranked second only to China in the number of people it executed, drawing criticism from the United Nations and human rights groups.
Tehran says the death penalty is essential to maintain law and order, and that it is applied only after exhaustive judicial proceedings.
Murder, rape, armed robbery, drug trafficking and adultery are among the crimes punishable by death in Iran.
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