The Iranian government has signed a deal with Italy's highway agency ANAS for the construction and management of a 1,200 km (745 miles) road project that will cost 3.6 billion euros ($4 billion), ANAS said.
The first stretch of highway covering 350 km will be completed by 2022 at a cost of 600 million euros, ANAS said.
The project is to build a road linking the Gulf port of Bandar Imam Khomeini to Bazargah on Iran's border with Turkey. Italy has worked hard to secure lucrative deals in Iran following a deal last year to lift crippling sanctions on Tehran in exchange for limiting its nuclear activities.
Iranian President Hassan Rouhani made Italy his first stop in Europe in January as he sought to drum up investment in the Iranian economy, while Italian Prime Minister Matteo Renzi visited Tehran in April with a large business delegation.
ANAS said the deal signed with the Iranian Ministry of Roads was a follow-up to a memorandum of understanding initialed in February.