Rekha Paudel netted twice after Saru Limbu had put Nepal on the front foot. Fatemeh Amiri and Fatemeh Ghasemi were on the target for Iran in a shortened match played with 35 minute halves at the Dasharath Stadium, Tripureshwar.
Nepal took the lead against the physically stronger Iranians in the 25th minute when Saru Limbu converted Manjali Kumari's corner kick.
The lead lasted for less than two minute as Fatemeh Amir scored in the 27th minute with a solo effort.
Rekha restored Nepal's lead eight minutes later by taking advantage of poor defensive work by Iran. Nepal went into the break with 2-1 lead. Rekha netted her second goal in the 47th minute, converting a pass from Samjhana Lawati.
Fatemeh Ghasemi cut the deficit for Iran to 1, scoring in the dying moments of the match. This couldn't prevent a defeat as the match ended with a 3-2 score-line in favor of the hosts.
Nepal coach Kishor Kumar KC expressed dissatisfaction with the performance of his side despite the victory. "I am not happy with today's [Monday] performance as both the defense and midfield failed to play to their potential. We conceded both goals due to poor defensive work," said KC, who also vowed to improve the team's performance against Maldives on Tuesday.
Skipper Puja Rana, herself a defender, was also unhappy with her team's performance. "We did not play to the level we expect," she lamented.
In contrast, Iran's coach Masoomeh Jahanchi said that her side performed impressively irrespective of the defeat. "I am pleased with the way the players performed against the home team in the opener," said Jahnchi.
Iran assistant coach Katayoun Khosromyar also took the time to praise the Nepali team's performance.
Earlier, Manjali failed to give Nepal an early lead in the 8th minute when her shot from the box was saved by Iran goalie Maedeh Davaji. Later, Nisha Thokar's free-kick from the edge of the zone went inches above the crossbar in the 66th minute.
In other matches, Sri Lanka thrashed Maldives by 6-0 at Army Physical Center in Lalitpur, in the other Group A match and currently lead the table due to their scoring prowess.
Similarly, India registered a landslide 12-0 win over Bhutan in Group B match played at the Dasharath Stadium.