The friendly fire reportedly sank one of Iran's own warships in the Sea of Oman.
40 naval personnel are missing in the incident, according to local media reports this evening.
'The Jamaran is a Moudge-class frigate armed with 4 C-802 (Noor) anti-ship cruise missiles. This is likely what was launched,' they wrote on Twitter.
An unconfirmed video shows the evacuation of wounded sailors from the frigate on Sunday evening.
Other video purportedly shows two injured sailors being recovered by fishermen at sea.