Forty-eight year old Bahman Golbarnezhad suffered a cardiac arrest after a serious crash on the downhill slope of the men's C4-5 road race.
He was treated at the scene and rushed to hospital where he died shortly after.
"The Paralympic Family is united in grief at this horrendous tragedy which casts a shadow over what have been great Paralympic Games here in Rio," said IPC President Sir Philip Craven.
As the Iranian team mourned, many athletes were yet to compete on the penultimate day of events in Rio.
Brazil's golden boy Daniel Dias bids to win his 14th Paralympic gold in the men's 100m freestyle S5 (19:22 local), while Omara Durand, the fastest female Paralympian of all-time, runs in the T12 400m (18:25).
Here are some of the highlights of day ten's action.
Hours before the tragic news of Golbarnezhad's death emerged, the men's road race finished in controversial fashion.
With less than 100 meters to go, race leaders Alistair Donohoe of Australia and Yahor Dementyev of Ukraine sprinted towards the finish.
The cyclists jostled and nudged each other as they fought for the gold, resulting in both their bikes colliding with the finish line in view.
Donohoe got up and ran across the line without his bike as Dementyev lay in the road.
After some confusion and deliberation, judges disqualified the Ukrainian, while Donohoe ranked in fifth place.
Instead the gold went to Daniel Abraham Gebru of the Netherlands, who has his own story to tell.
Fleeing the Eritrean-Ethiopian war as a teenager, the 31-year-old was only granted the right to compete for the Netherlands' Paralympics team ten weeks ago, according to Dutch media.
"Fantastic. A gift really. I thought it would be impossible, '' he told Rotterdam newspaper Algemeen Dagblad
After Saturday's dramatic road race, his first Paralympic gold medal will be a gift for Team Netherlands.
Brazil's Lauro Cesar Chaman won the silver medal, Italy's Andrea Tarlao the bronze.
The women's C4-5 road race was won by Team GB powerhouse Sarah Storey, who has racked up her third gold at Rio after wins in both the C4-5 time trial and individual pursuit
The achievement takes Storey's career Paralympic gold medal tally to 14 across two sports -- she competed in swimming until Athens 2004 when she switched to the bike.
Rio is the Briton's seventh Games, the first being Barcelona 1992. Despite having daughter Louisa three years ago, Storey finished the individual pursuit even faster than her London 2012 time, and has surpassed Tanni Grey-Thompson to become the most decorated female Paralympian of all time.
Brazil's football joy
It was a challenge for the football-mad host nation to stay silent in the gold medal 5-a-side football match against Iran, who were tragically unaware of teammate Golbarnezhad's death.
For the visually-impaired footballers, quiet is essential as the players rely on hearing a bell inside the ball to play. Only the goalkeeper is sighted.
Thankfully the crowd managed to contain their excitement as Brazil secured their fourth consecutive Paralympic gold in the event, beating the Iranians 1-0.
Team captain and prolific striker Ricardo Alves, aka Ricardinho, scored the decisive goal in the first half, dribbling the ball down the left hand side before sending it sailing through the Iranian goalkeeper's legs.
As the match reached its conclusion, the home crowd exploded into the screams and cheers they had suppressed.
Teenage sprint sensations
A trio of talented teenagers topped the podium of the women's T35 200m, a category for athletes with coordination impairments.
Seventeen-year-old Xia Zhou of China won the gold, 15-year-old Isis Holt of Australia took the silver while 16-year-old Maria Lyle of Great Britain clinched the bronze with her season's best.
The race was a triumph for Zhou, who smashed the world record set by Holt at the IPC World Championships a year earlier.
Holt put up a fierce fight to retain her world title, racing neck and reck with Zhou around the bend. However she was unable to keep up with the Chinese sprinter who accelerated in the final stretch to finish in 28.22 seconds -- 0.08 faster than her Australian rival's previous mark.
The youngest competitor in the event, Holt was delighted nevertheless. "I couldn't feel better. It was one of the best outcomes that I could have hoped for," she told the Paralympics official website
. "I tried so hard in that race and to have a medal, no matter the colour, is incredible."
Zhou's gold is her second at Rio, having already won the 100m.
More highlights to follow