The report from the ISNA news agency says one hand of the 34-year-old convict identified only as Ali was cut off by "guillotine" in a prison in Mashhad, some 900 kilometers (550 miles) northeast of the capital Tehran.
It said the convict was immediately sent to a hospital for treatment.
The Thursday report said Ali was detained in 2011 for allegedly stealing sheep, jewelry and motorbikes.
Iran's judiciary uses a strict interpretation of Islamic law in handing down such sentences. Cutting off the hands of thieves, however, has been rare in the recent years.
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