President Mahmoud Ahmadinejad promised sharp retaliation. But a sweeping offensive by authorities is unlikely.
Iranian officials have been reluctant to open full-scale military operations in the southeastern border zone, fearing it could become a hotspot for sectarian violence with the potential to draw in al-Qaida and Sunni militants from nearby Pakistan and Afghanistan.
The region's top prosecutor, Mohammad Marzieh, was quoted by the semi-official ISNA news agency as saying Jundallah claimed responsibility for the blast in the Pishin district near the Pakistani border.
There was no immediate statement directly from the group, which has carried out sporadic kidnappings and attacks in recent years - including targeting the Revolutionary Guard - to press their claims of persecution in the Shiite government and officials.
In May, Jundallah said it sent a suicide bomber into a Shiite mosque in the southeastern city of Zahedan, killing 25 worshippers.
The latest attack, however, would mark the group's highest-level target. It also raised questions about how the attacker breached security around such a top delegation from the Revolutionary Guard - the country's strongest military force, which is directly linked to the ruling clerics under Supreme Leader Ayatollah Ali Khamenei.
The official Islamic Republic News Agency said the victims included the deputy commander of the Guard's ground forces, Gen. Noor Ali Shooshtari, as well as a chief provincial Guard commander, Rajab Ali Mohammadzadeh. The others killed were Guard members or tribal leaders, it said.
The agency quoted the provincial forensics director, Abbas Amian, as saying 42 bodies had been handed over to his department.
More than two dozen others were wounded, state radio reported.
The commanders were entering a sports complex to meet tribal leaders to discuss Sunni-Shiite cooperation when the attacker detonated a belt fitted with explosives, IRNA said.
Ahmadinejad - who counts on support from the Revolutionary Guard - vowed to strike back.
"The criminals will soon get the response for their inhuman crimes," IRNA quoted him as saying.
But controlling the scrubland and arid hills along the southeastern borders is a huge challenge that has been out of Iran's reach.
Drug traffickers ferry opium and other narcotics through the cross-border badlands - a key source of income for the Taliban in Afghanistan and the ethnic Baluchi tribes that straddle the three-nation region and include members of Jundallah. Iran has pleaded for more international help to cut off the drug routes and criminal gangs.
Iran also has accused Jundallah of receiving support from al-Qaida and the Taliban, though some analysts who have studied the group dispute such a link.
"There is no evidence of outside help for Jundallah from wider militant networks," said Mustafa Alani, director of security and terrorism studies at the Gulf Research Center in Dubai. "It's a homegrown group that moves across the borders within fellow Baluchi tribes. It is very hard to control the border."
In an attempt to boost security in the region, Iran in April put the Revolutionary Guard directly in control of the Sistan-Baluchistan Province in Iran's southeastern corner.
The 120,000-strong Guard also controls Iran's missile program, guards its nuclear facilities and has its own ground, naval and air units.
The Revolutionary Guard led the blanket crackdown on dissident after Ahmadinejad's disputed re-election in June. But the attack Sunday appeared to have no link to the political showdowns.
State television accused Britain of supporting Jundallah, without providing any evidence.
The Revolutionary Guard blamed the attack on what it called the "global arrogance," a reference to the United States.
On the eve of talks about Tehran's nuclear program, Washington was quick to react.
State Department spokesman Ian Kelly said the United States condemned what he called an "act of terrorism." Reports of alleged U.S. involvement are "completely false," he said.
Iran's parliamentary speaker, Ali Larijani, told lawmakers that the bombing was aimed at further destabilizing the uneasy border region with Pakistan and Afghanistan.
"The intention of the terrorists was definitely to disrupt security in Sistan-Baluchistan Province," Larijani said.
Iranian officials summoned Pakistan's charge d'affairs in Tehran to lodge allegations that "terrorists" use bases in Pakistan to carry out attacks against Iran, IRNA reported.
In Quetta, Pakistan, police official Akbar Sanjrani said Iran had closed at least one border crossing. He said Iranian authorities did not give a reason for blocking the route, but Sanjrani speculated it was related to the bombing.
Pakistan's Foreign Office spokesman, Abdul Basit, also rejected Iranian claims that Jundallah's leader is in Pakistan.
"We are struggling to eradicate the menace of terrorism," Basit told Geo TV.
The group also has claimed responsibility for a February 2007 car bombing that killed 11 members of the Revolutionary Guard near Zahedan.
Despite Iran's claims of an al-Qaida link, Chris Zambelis, a Washington-based risk management consultant who has studied Jundallah, said in a recent article that there is no evidence al-Qaida is supporting the group. He does note, however, that the group has begun to use the kinds of suicide bombings associated with the global terror network.
"Jundallah's contacts with the Taliban are most likely based on jointly profiting from the illicit trade and smuggling as opposed to ideology," Zambelis wrote in the July issue of West Point's CTC Sentinel.