At least two airbases housing US troops in Iraq have been hit by more than a dozen ballistic missiles, according to the US Department of Defence.
Iran State TV said it was in revenge for the killing of Revolutionary Guard General Qassem Soleimani .
Two named sites attacked were Al-Asad and Irbil.
The al-Asad base houses about 1,500 US and coalition forces.
There's been no official word on casualties.
It marks the first time in recent years that Washington and Tehran have attacked each other directly rather than through proxies in the region.
In a statement the Pentagon claimed the missiles had been launched from Iran and targeted at least two US bases housing US military.
Using Twitter Iran's foreign minister confirmed Iran launched the missile attack but added " 'We do not seek escalation or war, but will defend ourselves against any aggression"
President Donald Trump has defended the targeted killing last week of Iran's top general , saying the United States "saved a lot of lives" with the killing of the general.
The attack on the US bases marks in a major escalation raising the chances of open conflict erupting between the two enemies, which have been at odds since Iran's 1979 Islamic Revolution.