Iran faces its toughest sanctions for failing to comply with UN demands over its nuclear enrichment, the US says.
The Security Council is set to vote on a fourth round of sanctions to tighten financial curbs on Iran, while expanding a limited arms embargo.
US Secretary of State Hillary Clinton said they were "the most significant sanctions that Iran has ever faced".
But Iran's president warned his country would not agree to nuclear talks if the sanctions were imposed.
Mahmoud Ahmadinejad also said that a nuclear fuel-swap deal brokered by Turkey and Brazil was an offer that would not be repeated.
Iran agreed in May to deposit 1,200kg of low-enriched uranium with Turkey, in return for reactor fuel, but the US and its Western allies said the agreement was too little too late.
They fear Tehran is secretly trying to build a nuclear bomb. Iran says its programme is aimed solely at peaceful energy use.
There have been three rounds of UN sanctions against Iran, blocking trade of "sensitive nuclear material", freezing the financial assets of those involved in Iran's nuclear activities, banning all of Iran's arms exports and encouraging scrutiny of the dealings of Iranian banks.
The new set of proposed sanctions is aimed at putting pressure on Tehran to stop enriching uranium.
Although it was watered down during negotiations with Russia and China on Tuesday, it does tighten existing restrictions on areas like shipping and finance.
Its proposals include:
- Prohibiting Iran from buying several categories of heavy weapons including attack helicopters and missiles
- Urging all states to inspect cargo suspected of containing banned items to and from Iran in their territory, including seaports and airports
- Calling on countries to block financial transactions and ban the licensing of Iranian banks if they suspect a link to nuclear activities
- Increasing the number of individuals - reportedly including senior nuclear officials - and companies targeted with asset freezes and travel bans
Mrs Clinton was upbeat about the prospect of the new resolution, which has the support of all five of the UN's veto-holding members.
"The amount of unity that has been engendered by the international community is very significant," she said during a press conference with Ecuadorian President Rafael Correa in Quito.
Brazil and Turkey - also security council members - say the sanctions will kill attempts to revive negotiations with Iran, and put that case forward in a last-minute special session at the UN on Tuesday.
Despite their reservations, though, the BBC's Barbara Plett at the UN headquarters in New York said there was little doubt the resolution would be adopted.
While Turkey, Brazil and Lebanon are not expected to back the resolution, none of them has a veto.
Western diplomats expect 12 countries on the 15-member council to vote for the measure.
On Wednesday, the US, Russia and France outlined their concerns about the Iran-Turkey-Brazil deal in letters to the International Atomic Energy Agency (IAEA).
The letters were not made public, but US envoy to the IAEA Glyn Davies said the deal "would still leave Iran with substantial stocks [of low-enriched uranium], decreasing the confidence-building value of the original proposal".
Iranian nuclear chief Ali Akbar Salehi said the UN vote showed that "from the beginning, [the US and its allies] were not interested to do the deal".
Backing Iran's enemies?
Mr Ahmadinejad, speaking on Tuesday in Istanbul where he is attending a regional summit, said that if the US did not change its position "the first ones to lose would be President Obama and the people of the United States".
He also urged Russia to be "careful not to be beside the enemies of the Iranian people".
His comments came ahead of talks with Russian Prime Minister Vladimir Putin, who is also attending the summit in Turkey, and has in the past cautioned against tough action on Iran.
Amid heightened tensions over the new resolution, Iran said on Tuesday it had evidence one of its nuclear scientists was abducted and was being held in the US against his will.
Shahram Amiri disappeared a year ago while on a pilgrimage to Saudi Arabia.
A video broadcast by Iranian TV on Tuesday purported to show Mr Amiri saying he had been kidnapped and was living in Arizona.
Hours later, another video posted on YouTube appeared to show the scientist saying he was happy in America. The US has denied abducting him.