One man climbed up to erect a pre-Revolution Iranian flag, but this was removed by someone from inside the embassy.
At least 10 police officers have been keeping access to the road open on the narrow road in the Wellington suburb of Hataitai as the protest continues.
The crowd has a loudhailer and has been chanting since about 10am.
It comes as US-based rights group HRANA said it had verified the deaths of 544 people in Iran, 15 days into protests against the Government.
The protests began over rampant inflation but have since spread across the country and had become general protests against the regime.
The flow of information outside of Iran had been constrained since authorities cut off internet access and telephone lines on Thursday.
Foreign Affairs Minister Winston Peters expressed grave concern at reports protesters have been killed in Iran, and the Ministry of Foreign Affairs and Trade (MFAT) urged any New Zealanders still in Iran to leave now.
US President Donald Trump was also briefed on potential military intervention options, including military strikes and sanctions.
- RNZ