Elsewhere, many welcomed the agreement as an important first step toward curbing Iran's suspect nuclear program.
Israel and Gulf countries led by Saudi Arabia have formed an unlikely alliance in their opposition to Sunday's deal, joined together by shared concerns about a nuclear-armed Iran.
While most Gulf countries remained silent in the first hours after the deal was reached in Geneva, Israeli Prime Minister Benjamin Netanyahu wasted little time in criticizing it, calling it a "historic mistake" and saying he was not bound by the agreement.
Under the deal, Iran will curb many of its nuclear activities for six months in exchange for limited and gradual relief from painful economic sanctions. The six-month period will give diplomats time to negotiate a more sweeping agreement.
The package includes freezing Iran's ability to enrich uranium at a maximum 5 percent level, which is well below the threshold for weapons-grade material and is aimed at easing Western concerns that Tehran could one day seek nuclear arms. International monitors will oversee Iran's compliance.
For Iran, keeping the enrichment program active was a critical goal. Iran's leaders view the country's ability to make nuclear fuel as a source of national pride and an essential part of nuclear self-sufficiency.
"Today the world became a much more dangerous place because the most dangerous regime in the world made a significant step in obtaining the most dangerous weapons in the world," Netanyahu said.
Israeli officials acknowledged they would have to turn their focus toward affecting the outcome of the final negotiations. Israel is not part of the Geneva talks but remains in close touch with the U.S. and other participants.
Israel feels especially threatened by Iran, given Tehran's repeated references to destroying Israel, its support for hostile militant groups on Israel's borders and its development of long-range missiles.
Another Nobel peace laureate, Mohammed ElBaradei, Egypt's pro-democracy leader and former director of the United Nations nuclear watchdog agency, welcomed the deal.
In a tweet on his official account, he wrote: "After decade of failed policies, world better off w/ Iran deal. Equity, trust building, respect & dialogue R key to any conflict resolution."
The muted response in the Gulf came after the rulers of Qatar and Kuwait met Saudi King Abdullah over the weekend to discuss regional issues, foremost Iran.
Saudi Arabia and Iran's regional enmity increasingly has played out as a proxy war in Syria with both countries providing lethal support for the warring sides. Saudi Arabia also accuses Iran of backing Shiite unrest across the region.
Bucking the trend, the United Arab Emirates welcomed the agreement and said it was a step toward a final deal "that preserves the stability of the region and protects it against nuclear proliferation."
The UAE's financial center, Dubai, has close links to Iran.
Outside of the region, other nations welcomed the deal.
Herman Van Rompuy, president of the European Council, called it an important step toward "providing assurances that guarantee the peaceful nature of the Iranian nuclear program."
Britain, one of the parties in the talks, said the U.K. and its partners will implement the deal in good faith and will look for Iran to do the same.
"This is a very important change, that it is possible to agree with Iran about these matters, that the political will from all sides has been there," Foreign Secretary William Hague told Sky News.
French President Francois Hollande, whose government was also in the negotiations, said he was committed to seeing the deal succeed.
"France will stay engaged to reach a final deal in this subject. The intermediary deal adopted overnight is a step in the right direction," he said.
Russian President Vladimir Putin said the agreement vindicated Russia's calls for a diplomatic solution.
"The result of Geneva is a win for all, showing once again that by working collectively and with mutual respect it is possible to find answers to current international challenges and threats," Putin said in a statement released by the Kremlin.
Iran's eastern neighbor Pakistan, a declared nuclear power, said the deal "should augur well for peace and security in our region and the world at large."
Pakistan's rival India, another nuclear power, also welcomed the deal.
Iran's allies, meanwhile, lined up behind the deal.
Iraqi government spokesman Ali al-Moussawi called it a "step forward in order to solve other regional problems."
The Syrian government, which relies on Iran's support in its battle against rebels fighting to topple President Bashar Assad, also said it was proof that negotiations were the best way to resolve a conflict.
Associated Press writers Sarah DiLorenzo in Paris; Raf Cassert in Brussels; Aya Batrawi in Dubai, United Arab Emirates; Sarah El Deeb in Cairo; Lynn Berry in Moscow; Nirmala George in New Delhi; Albert Aji in Damascus, Syria; and Sameer N. Yacoub in Baghdad contributed to this report.