The fund, which is worth nearly 7 trillion kroner (€735 billion, $814 billion) and targets a 35-percent share of bonds in its portfolio, had been barred from buying into Iranian debt since January 2014 because of sanctions over Iran's nuclear programme. North Korea and Syria, also hit by sanctions, remain off limits to the fund.
But since a deal on Iran's nuclear programme, signed in July 2015, economic sanctions against Iran are being phased out, the Norwegian finance ministry noted in a statement.
"Therefore the finance ministry, in agreement with the foreign ministry ... has decided that restrictions concerning trade in Iranian government bonds should be lifted," it said.
The Norwegian government pension fund, fed by oil income, is to help the Scandinavian country meet future pension requirements.
Its investment policy is run according to strict ethical rules, with a focus on sustainable economic, environmental and social development.