He was shot as he was leaving the Iranian ambassador’s residence in the southern Hadda district by car.
The diplomat, named as Ali Asghar Assadi, was taken to hospital but died from his wounds.
According to a report by the Yemeni state news agency, armed elements on Saturday morning approached the diplomat, only identified as Mr. Assadi, and attempted to kidnap him but when he resisted the move, they opened fire and seriously injured him.
The victim, however, succumbed to his injuries following his immediate transfer to a local hospital.
Iranian state TV said he had been hit in the chest and stomach while driving. It said Mr Assadi, described as Iran’s economic attache, had been “martyred”.
An Iranian foreign ministry spokeswoman said: “Around noon today (Saturday) a group of terrorists attacked a diplomat from our embassy in one of the streets of Sanaa attempting to kidnap him. But, because the diplomat resisted, the terrorists opened fire on him.”
A Yemeni police source told AFP news agency that the attackers were in a van and fired on the diplomat three times.
“The Islamic Republic of Iran strongly condemns this incident and will follow up on the case with the Yemeni authorities,” the foreign ministry spokeswoman said.
Attacks on foreigners in Yemen have intensified in the past few months.
Meanwhile, Iran’s foreign ministry spokeswoman Marzieh Afkham confirmed the terrorist attack in an interview earlier but has not yet commented on the diplomat’s demise.
This is the second terrorist attack against Iranian diplomats in Yemen in past months.
Last July, unidentified men kidnapped Nour-Ahmad Nikbakht, an administrative staff of the Iranian Embassy in Sana’a as he was on his way to work from his residence.
Despite persisting efforts by Iran’s foreign ministry authorities to secure his safe release, his whereabouts and condition remains unknown.
Meanwhile, Afkham emphasized that aspects of the latest terrorist attack against an Iranian diploat in Sana’ais being “seriously pursued” with the Yemeni government.