Mr Coats said Iran is continually improving the range and power of its ballistic missiles in the hopes it will be able to develop a nuclear-capable one that could hit American soil.
He said: “We judge that Tehran would choose ballistic missiles as its preferred method of delivering nuclear weapons if it builds them.”
It is thought Iran is using its space program to develop its ICBM technology as a successful launch is similar for both satellites and missiles.
Mr Coats added: “Progress on Iran’s space program could shorten a pathway to an ICBM because space launch vehicles use similar technologies.
“Iran is pursuing capabilities to meet its nuclear energy and technology goals and to give it the capability to build missile-deliverable nuclear weapons if it chooses to do so.”
It comes just days after Iran fired a high-speed torpedo in the Straight of Hormuz – described by US officials as a key shipping route and the world’s most “strategically important choke points”.