Along with Iran, Annan also decided not to extend an invitation to representatives from Saudi Arabia to peace talks, scheduled for this Saturday in Geneva, according to the Associated Press.
American, British and French diplomats had opposed Iran's participation in protest of Tehran's decision to keep inspectors out of its nuclear facilities.
Mohammad Khazaee, Iran's ambassador to the UN, fired back against the Iran's exclusion on Wednesday, saying Annan's decision was "neglecting the realities on the ground."
"A very important fact that cannot be ignored by anybody is the influence and constructive role that the Islamic Republic of Iran has in the region," Khazaee told reporters at U.N. headquarters in New York.
"If some powers do not want to benefit from this influence and constructive role, that's their problem," he added.
Prior to Wednesday's announcement, Annan had been pushing hard for Tehran's involvement in any effort to help quell the rapidly escalating war between Syrian president Bashar Assad and anti-government rebels.
“Iran, as an important country in the region, I hope will be part of the solution,” Annan told reporters on June 8.
At the time, Annan saw Iran playing a role in a tentative plan that would have Washington and Moscow ease Assad out of office while allowing a number of his top officials to remain in government.
But any involvement by Iran in a potential Syrian peace plan was a non-starter for a number of congressional lawmakers.
Sen. Ben Nelson (D-Neb.), a member of the Senate Armed Services Committee, said last Tuesday that lawmakers would not stand for any effort to hand a modicum of control over a potential Syrian peace plan to Tehran.
Even if Iran played a hand in bringing the Syrian crisis to a peaceful end, Russian leaders continue to balk at any notion of bringing down Assad, according to Nelson.
The task of deposing Assad, from Russia's perspective, "is up to the Syrians, which is to say that it isn't going to happen, unless there is some outside influence," Nelson said.
Saturday's upcoming peace talks come as anti-Assad forces have begun to close in on the Syrian capitol of Damascus. On Wednesday, gunmen stormed a pro-Assad television station just outside the capitol, according to recent reports.
Government forces and paramilitary groups loyal to the Assad regime continue to hammer rebel strongholds centered near the city of Homs in northern Syria with tanks and heavy artillery.
A previous peace plan brokered by Annan in March has largely been considered a failure, particularly after U.N. observers were pulled out of the country after being attacked by Syrian forces.
--Story was updated at 4:34pm to include comments from Iranian Ambassador to the United Nations Mohammad Khazaee