Days after the United States widened bombing raids against jihadists in Iraq to Syria, Rouhani warned that regional moderates, albeit with international support were best placed to resolve extremism threatening the world.
"The strategic blunders of the West in the Middle East, Central Asia and the Caucasus have turned these parts of the world into a haven for terrorists and extremists," he told the UN General Assembly in New York.
The United States has the support of five Arab countries in its air campaign to defeat what President Barack Obama on Wednesday called a "network of death", the Islamic State group.
Rouhani called for "moderate politicians" in the Middle East to take the lead in countering "violence and terrorism" and said it was a "myth" that Iran seeks to control Arab countries in the region.
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"The right solution to this quandary comes from within the region... With international support and not from outside," he said, warning otherwise there would be "repercussions for the whole world."
US Secretary of State John Kerry is to hold three-way talks with his Iranian counterpart Mohammad Javad Zarif and EU foreign policy chief Catherine Ashton later Thursday as they push for a nuclear deal by a November 24 deadline.
"We are determined to continue negotiations with our interlocutors in earnest and good faith, based on mutual respect and confidence," Rouhani said.
A deal would be a "historic opportunity" for the West that would send a message of "peace and security," he added.
Iran wants UN and Western sanctions lifted, and is pushing for the right to enrich uranium, a process which can produce material for a bomb.
It has long denied it is seeking to develop a nuclear arsenal.
Rouhani told the United Nations that "oppressive sanctions" against Iran were a "strategic mistake" and that any delay in reaching a final agreement would only raise economic costs.