"Many around the world, particularly on this continent, speak eloquently about multilateralism, but they also need to walk the walk," Zarif told the Munich Security Conference in an impassioned address. "INSTEX falls short of the commitments by (European countries) to save the nuclear deal. Europe needs to be willing to get wet if it wants to swim against a dangerous tide of U.S. unilateralism."
The deal promises Iran relief from sanctions in exchange for limiting its nuclear program, and so far the International Atomic Energy Agency has said that Tehran has been living up to its obligations.
Those working to preserve the agreement have been trying to walk a fine line between mollifying Iran without angering Washington. Zarif's comments appeared directed at European assurances that INSTEX could concentrate on products not currently subject to U.S. sanctions, such as medicine, medical supplies and agricultural goods, rather than on broader trade.
On Saturday, U.S. Vice President Mike Pence slammed INSTEX and urged others to abandon the nuclear deal entirely.
"The time has come for our European partners to stop undermining U.S. sanctions against this murderous revolutionary regime," Pence said before leaving Germany. "The time has come for our European partners to stand with us and with the Iranian people, our allies and friends in the region. The time has come for our European partners to withdraw from the Iran nuclear deal."
Before Pence spoke, German Chancellor Angela Merkel defended the Iran deal, saying while she shared concerns about Iran's missile program and its regional ambitions, it was important to keep "the small anchor we have (with Iran) in order maybe to exert pressure in other areas."
Merkel's comments, and her defense of global diplomacy instead of a go-it-alone foreign policy, drew lengthy applause.
Zarif told the conference that Pence had "arrogantly demanded that Europe must join the United States in undermining its own security and breaking its obligations" and urged them to push back against American pressure.
"If the United States were to come, in the course of their fight with China, and tell Europe to stop dealing with China, what would you do?" he asked. "Whatever you want to do then, do now, in order to prevent that eventuality."
He would not comment on whether the nuclear deal will survive without the U.S. but said Iran was not prepared to renegotiate it as Trump has suggested.
"Nothing can be done that is better than this deal," he said. "It's not all we want and it's certainly not all the United States wants but it's the best that can be achieved."
Responding to Pence's comments that Iran was the "greatest threat to peace in the Middle East," Zarif said the U.S. had an "unhealthy fixation" with Iran and was itself the "single biggest source of destabilization in our neighborhood."
"The U.S. claims ... that it is Iran which is interfering in the region, but has it ever been asked whose region?" Zarif said. "Just glimpse at a map for a second — the U.S. military has traveled 10,000 kilometers to dot all our borders with its bases. There is a joke that it is Iran's fault that it put itself in the middle of all (the) U.S. bases."
Zarif also accused the U.S. administration of looking for regime change in Iran — something Washington denies — and said Israel was "looking for war" with "violations of Lebanon's air space and shooting into Syria."
"The risk (of war) is great, but the risk will be even greater if you continue to turn a blind eye to severe violations of international law," he said.
Benny Gantz, a former Israeli military chief and Israeli President Benjamin Netanyahu's primary challenger in the upcoming April election, responded in a separate forum, slamming Iranian aggression in the region.
"On my watch, there will be no appeasement (of Iran). On my watch, Iran will not threaten Israel by taking over Syria, Lebanon or Gaza strip," he said. "On my watch, Iran will not have nuclear weapons."
Gantz told the audience, speaking of Zarif: "do not be deceived by his eloquence. Do not be fooled by his lies."
The Munich Security Conference is an annual gathering of world leaders and defense and foreign policy officials.
Geir Moulson in Berlin contributed to this report.