Iranian Health Minister Marzieh Vahid Dastagerdi told the semiofficial ISNA news agency that another 270 were injured, including 11 in serious condition and the death toll in the Zahedan blasts could still rise.
The Jundallah insurgency, a Sunni group that has killed scores in recent years, claimed responsibility for the attack in a statement on their website saying it had killed more than a 100 members of the elite Revolutionary Guard in revenge for the execution of their leader last month.
The group struck another mosque in Zahedan in May 2009, killing 25 people.
According to authorities, the first blast caused minimal damage, but it prompted people to rush to the site where they were caught by a second explosion. Similar tactics have been used by Sunni insurgents in Iraq to maximize civilian casualties.
The governor of the Sistan-Baluchistan province told state TV that "investigations on finding the responsible party will continue despite one group already claiming responsibility." He did not name the group.
Reports said some members of the powerful Revolutionary Guard were among victims of the explosions who had gathered at the mosque to celebrate the birthday of Imam Hussein, the grandson of the Prophet Muhammad.
Gen. Hossein Salami, deputy head of the Revolutionary Guard, told worshippers during Tehran Friday prayers that the victims "were martyred by hands of mercenaries of the U.S. and U.K."
He was echoed by influential lawmaker Alaeddin Boroujerdi who said "America should be answerable for the terrorist incident in Zahedan."
U.S. Secretary of State Hillary Clinton condemned the bombing on Thursday in the "strongest possible terms" and called for those responsible to be held accountable.
"The United States extends its sympathy to the families and loved ones of those injured and killed," she said.
Jundallah says it is fighting for the rights of the Sunni Baluch minority, and accuses Iran's Shiite-dominated government of persecution. Tehran says Jundallah is behind an insurgency in its southeast that has destabilized the border region with Pakistan.
In June, Iran hanged the group's leader, Abdulmalik Rigi, in Zahedan after he was found guilty of carrying out attacks against civilians, armed robbery, and engaging in a disinformation campaign against Iran.
His younger brother, Abdulhamid, was executed in May in Iran after being captured in Pakistan in 2008 and extradited to Iran.
The group gained attention six years ago after it launched a campaign of sporadic kidnappings and bombings that killed dozens. The group claims minority Sunni tribes in southeastern Iran suffer discrimination at the hands of Iran's Shiite leadership.
Iran has accused the U.S. and Britain of supporting Jundallah in an effort to weaken the Iranian government, a charge they deny. Iran also claims the group is linked to al-Qaida, but experts say no evidence of such a link has been found.