President Donald Trump has said Iran appears to be "standing down" and said no Americans were harmed in Iran's ballistic missile strike on two Iraqi bases housing US troops.
Speaking from the White House, Mr Trump seemed intent on de-escalating the crisis, indicating that he would not retaliate militarily for the strikes.
Instead, he said the US would immediately put in place new economic sanctions "until Iran changes its behaviour" after the country's most brazen direct assault on America since the 1979 seizing of the US embassy in Tehran.
The attack came days after Mr Trump authorised the targeted killing of General Qassem Soleimani, the head of Iran's elite Quds Force.
Iran had pledged to retaliate, bringing the two countries closer to the brink of war.
Mr Trump credited an early warning system "that worked very well" for the fact that no Americans or Iraqis were killed.
He added that Americans should be "extremely grateful and happy" with the outcome.
Mr Trump reiterated his position that "Iran will never be allowed to have a nuclear weapon" and called for new nuclear negotiations to replace the 2015 nuclear deal from which he withdrew the US.
He also announced he would ask Nato to become "much more involved in the Middle East process".
The president also used his address to speak directly to Iran, saying "we want you to have a future and a great future".
He said the United States is ready to embrace peace and all who seek it.