The UAE had decided to lower "diplomatic representation to the level of charge d'affaires and reduce the number of Iranian diplomats in the country," the foreign ministry said in a statement, quoted by the official WAM news agency.
The move came after Saudi Arabia severed links with the Islamic republic on Sunday, amid escalating tensions triggered by the execution of a Shiite cleric in the Sunni-ruled kingdom at the weekend.
Bahrain and Sudan followed suit by also cutting ties with Iran on Monday.
"This exceptional step has been taken in the light of Iran's continuous interference in the internal affairs of Gulf and Arab states, which has reached unprecedented levels," said the UAE foreign ministry.
It said relations should be based on "mutual respect for the sovereignty" and "non-interference in the internal affairs of others".
The UAE enjoys strong business ties with Iran, and the emirate of Dubai is home to a large Iranian community.
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