In the photo, Ahmadinejad is seen consoling Elena Frias, their hands clasped together and faces touching, next to the flag-draped coffin of her son.
Islamic tradition forbids men from touching women who are not members of their direct family.
According to The Telegraph, Mohammad Taghi Rahbar, the Friday prayer leader of Iran's second city, Isfahan, told Mehr news agency that Ahmadinejad had "lost control".
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"Shaking hands with a non-mahram [unrelated by family] woman, under any circumstances, whether young or old, is not allowed. Hugging or expressing emotions is improper for the dignity of the president of a country like the Islamic Republic of Iran."
A doctored photo has also surfaced showing Ahmadinejad locked in the same embrace with a man who has been identified as Egyptian opposition leader and former director general of the UN's International Atomic Energy Agency, Mohamed ElBaradei.
Several reports suggest the second photo was released by Iranian government officials in an attempt to curb criticism of the president by claiming it was the original.
Ahmadinejad has been caught up in a behind-the-scenes struggle for some time with his superior, Iran's Supreme Leader Ayatollah Ali Khamenei.
A presidential election is set for June in Iran, but the country's constitution forbids Ahmadinejad from seeking a third term in office.