The vessels headed toward Syria, but were expected to remain in international waters as they passed the Israeli coast.
The voyage took the frigate Alvand and the supply Kharq close to NATO's southern flank and could further destabilize the Middle East, a region already reeling from an unprecedented wave of anti-government rebellions.
In Tehran, the deputy commander of the Iranian navy said that Iran has "suprised the Zionist regime" with the journey to the Mediterranean.
"The world arrogance (U.S.) should know that the army of the Islamic Republic is fully prepared to defend the holy ideals of the Islamic Republic and this readiness grows day by day," Brigadier-General Abdolrahim Mousavi told the official Iranian news agency IRNA.
In Washington, State Department spokesman P.J. Crowley refused to say whether the transit in and of itself, or the Egyptian decision to allow it, were provocations.
"We will be watching carefully to see where these ships go and the implications of that," he said.
Egypt is the gatekeeper of the strategic canal which links the Red Sea and the Mediterranean.
Egypt's new military rulers, who took power from ousted President Hosni Mubarak on Feb. 11, appeared to have no choice but to allow the passage. An international convention regulating shipping says the canal must be open "to every vessel of commerce or of war."
Iranian warships have not passed through the Suez Canal since 1979.
In sending warships to the Mediterranean now, Iran was asserting itself as a regional power and testing whether Egypt's new rulers will stick to the pro-Western line of the Mubarak government. Some said the voyage also signals that Iran is ready to come to the aid of regional allies, including Syria and Iranian proxies Hamas in Gaza and Hezbollah in Lebanon.
Israeli Prime Minister Benjamin Netanyahu denounced Iran late Tuesday, but he did not refer directly to the two warships.
"Iran seeks to exploit the earthquake" now shaking the region, he said. "It is seeking to bring down democratic reform. It is seeking to prevent it. It is seeking to shut down the lights and create another era of darkness like the one we have in Tehran."
Vice Premier Silvan Shalom accused Iran of trying to dominate the entire region.
"The passage of the Iranian ships is part of the comprehensive struggle that Iran is conducting against the West for domination and control in the Middle East," he told an energy conference. "The objective of the Iranian provocation is to signal to the leaders of the Arab world who the new leader is in the Middle East."
Despite the strong language, Israel was seen as unlikely to take action against the vessels.
Iran and Israel are bitter enemies. Israel considers Iran a threat because of its nuclear program, missile development and frequent references by its leader to Israel's destruction. Iran denies it has nuclear weapons ambitions, but it backs militant anti-Israel groups like Hamas and Hezbollah.
Israeli security officials said that as long as the ships remain in international waters, there is nothing Israel can legally do. They spoke on condition of anonymity because of the sensitivity of the issue.
The Iranian ships are headed for a training mission in Syria, an arch foe of Israel.
In Damascus, officials at the Iranian Embassy said it would mark the first time in years that Iranian naval vessels dock in a Syrian port. The ships were heading for Latakia, about 350 miles (600 kilometers) from the canal, a voyage of about a day.
The ships paid about $300,000 in fees for the canal passage, according to a maritime agent.