Friday's move will test public support for moderate President Hassan Rouhani in a nation battered by inflation and economic sanctions imposed over Iran's controversial nuclear program.
Subsidies have kept the cost of gasoline artificially low for consumers in OPEC-member Iran. The slash aims to release government money for production and infrastructural projects.
Under the new pricing scheme, each litre jumped to 7,000 rials (22 cents) from 4,000 rials (12 cents).
That works out to about 83 cents a gallon under the new pricing structure, compared to 45 cents under the former. Each car has a monthly ration of 60 litres (15.85 gallons).