Iran joined the international dash for space in earnest on Monday when it claimed to have successfully launched a live monkey into space in an Iranian-built space capsule.

Iranian media reported (video) that the country's space agency had sent the creature 75 miles (120 km) above the Earth in a Kavoshgar rocket capsule named Pishgam (Pioneer). Though the report has yet to be independently verified, officials said the capsule had returned intact and the monkey was still alive after its sub-orbital experience.

"The explorer rocket … returned to the Earth after reaching the desired speed and altitude, and the living creature (a monkey) was retrieved and found alive," the semi-official Fars news agency reported.

Iran's English-language state television, Press TV, showed images of a grey-tufted monkey strapped into a chair the size of an infant's car seat before being placed into the capsule. The site of the rocket launch was not given.

Within minutes of the news breaking, the monkey's picture circulated online and drew comparisons with the 1940s and 1950s heyday of the space race, when animals were heroes of the competing US and Soviet Union programmes.

In 1948, US scientists sent a rhesus monkey called Albert I to a height of 83 miles but the creature, the first animal on board a rocket, died before returning to Earth. The Soviet Union sent dogs into orbit by way of retaliation.

The Iranian launch was part of anniversary celebrations of the 1979 revolution, which are held for a period of two weeks in early February. Iran often flaunts its technological and scientific advances at this time of the year.

Iran's defence minister, General Ahmad Vahidi, described the launch as a "big step for our experts and scientists". He said it was merely the initial phase of a broader Iranian plan to send humans into space by 2020.

"This shipment returned safely to Earth with the anticipated speed along with the live organism," Vahidi was quoted by Fars as saying. "The launch of Kavoshgar and its retrieval is the first step towards sending humans into space in the next phase."

Hamid Fazeli, director of the country's space agency, said a monkey was chosen because of its biological similarities with humans.

Earlier attempts by Iranian scientists to fire monkeys into space have failed, but in February 2010 an Iranian research rocket, Kavoshgar 3 (Explorer 3), carried a mouse, two turtles and several worms into space.

President Mahmoud Ahmadinejad said at the time that the launch showed Iran "could defeat the [west's] domination" in the battle of technology. As Ahmadinejad took office for his first term in 2005, Iran stepped up its space programme and it has since launched satellites into orbit, including its first indigenous satellite, Omid (Hope), in 2009.

Michael Elleman, a senior fellow at the International Institute for Strategic Studies (IISS), said the launch was not a surprise because Iranian authorities had previously signalled their intentions.

"It appears that a modified artillery rocket was used to launch the poor monkey straight up into space and return to earth in a capsule slowed by a parachute," he told the Guardian. "Space in this instance is defined as about 100km altitude. The 100km threshold is a common one, as this is where the atmosphere is said to be negligible."

He added: "The rocket employed for this mission appears to be from either a Zelzal or Fateh-110 artillery rocket. When used for military purposes, the maximum range when carrying a roughly 500kg payload is 200 to 250km, though Iran often claims a 300km range. If launched straight up, it should achieve an altitude of 120km or more, depending on the mass of the capsule containing the monkey.

"Strategically, no new military or strategic capability has been established or demonstrated by Iran with this launch," Elleman said. He added: "This is at least Iran's second attempt, though the first one was not acknowledged publicly, so I assume the inaugural launch attempt did not go well. Nonetheless, Iran has an ambitious space exploration programme that includes the goal of placing a human in space in the next five or so years and a human-inhabited orbital capsule by the end of the decade. Today's achievement is one step toward the goal, albeit a small one."

Following the news on Monday, the animals rights group Peta said it was appalled by the photographs: "Iran is repeating the wasteful and cruel mistakes that marked the darkest days of the space race."

A Peta statement added: "We are appalled by photos of a visibly terrified monkey crudely strapped into a restraint device in which he was allegedly launched into space by the Iranian Space Agency. Monkeys are highly intelligent, sensitive animals who not only are traumatised by the violence and noise of a launch and landing, but also suffer when caged in a laboratory before and – if they survive – after a flight."

At a time when financial stringency due to western sanctions and threats of war looms over the Islamic republic, Iranian rulers are also exploiting the launch to demonstrate that international pressure has not prevented Tehran from making technological progress, especially in its disputed space and missile programmes.

US state department spokeswoman Victoria Nuland neither confirmed whether the monkey had been sent into space or if a launch had taken place at all.

At a daily press briefing on Monday, she told journalists that if the reports were true, the development would represent a "serious concern". The state department believes any such space mission would violate UN security council resolution 1929, whose text bars Iran from "any activity related to ballistic missiles capable of delivering nuclear weapons, including launches using ballistic missile technology."

A senior Iranian military commander also announced that a new missile would be unveiled shortly as part of the anniversary celebrations.

Iran's missile programme has suffered many setbacks in recent years because of a series of explosions at military bases. In November 2011, a blast at a missile base 30 miles away from Tehran, killed Hassan Tehrani Moghaddam, who was described as the "architect" of the country's missile programme.

Western powers fear Iran's space programme could have military dimensions.

Western governments fear that Iranian scientists might be simultaneously working on missile and nuclear programmes aimed at producing nuclear warheads. Iran denies the allegations and says its nuclear activities are for peaceful purposes, such as producing medical isotopes.

Iran's nuclear programme has also suffered blows from the assassination of its nuclear scientists and a series of cyber-attacks. Tehran's leaders have remained defiant of six UN security council resolutions calling on them to halt enrichment of uranium and they have refused to co-operate fully with the International Atomic Energy Agency over their nuclear programme.

Nuclear talks between Tehran and the west have currently reached a stalemate with no clear date scheduled for the next round of talks. A spokesperson for the European Union's foreign policy chief, Catherine Ashton, complained on Monday that Tehran had rejected a proposal to meet at the end of January. Iran says it has fully cooperated. Initial talks are under way to determine a date in February.