The special operation, directly overseen by IDF Chief of Staff Lt.-Gen.Benny Gantz, took place in the Red Sea 1500 kilometers away from Israeli shores.
Missile ships and Navy commandos raided a ship carrying Syrian manufactured M-302 rockets.
The crew is in Israeli custody, and the ship is being towed by the Navy toandnbsp;Eilat, where it is expected to arrive in the coming days.
The rockets originated inandnbsp;Syria, according to military intelligence assessments.
Iranandnbsp;flew the rockets to an Iranian air field, trucked them to a sea port, and shipped them toandnbsp;Iraq, where they were hidden in cement sacs.
The ship then set sail from Iraq to Port Sudan, near the Sudanese-Eritrean border, on a journey expected to last some ten days.
Had the shipment of rockets not been intercepted, the rockets would have been unloaded at Port Sudan and taken overland throughandnbsp;Egypt, into Sinai, and through smuggling tunnels into Gaza.
One day before reaching its destination, the Israel Navy pounced, raiding the vessel and bringing it under its full control. There were no injuries in the incident.
"We have certain proof that Iran was behind this," a senior military source said.
"The final destination was theandnbsp;Gaza Strip, where Iran hoped to unload the rockets and transfer them to terrorist organizations," he added.
(The Klos-C, Screenshot,andnbsp;IDF Spokesperson)
The ship, called Klos-C, sailed under aandnbsp;Panamaandnbsp;flag, and carried a crew of 17 people from various countries. "We don't yet know what the crew did or did not know," the source said.
"We found the rockets packed closely together on board," he added.
Navy Commander Rear Admiral Ram Rotenberg was on board one of the missile ships involved in the operation, the source confirmed.
Iran is believed to store some of its rockets in Syria for future movement to terror organization. The lengthy path of the rockets was intended to help fool Israeli intelligence and throw it off track from the weapons.
With a range of between 100 to 200 kilometers (depending on upgrades carried out to their motors), the entrance of M-302 rockets to Gaza would represent a new level of threat to the Israeli home front.
The IDF Spokesman's Unit said that the operation was made possible by inter-agency intelligence cooperation and the IDF's enhanced capabilities. "This prevented the arrival of a shipment of deadly and advanced weapons, which was aimed at harming Israeli civilians, and intended to reach the terrorist organizations of the Gaza Strip who are waging confrontation against Israel."
The spokesman added that special commando navy teams acted in accordance with international law during the raid and boarded the ship for armed searches before uncovering the rockets.
"The IDF will continue to act against the regional arms race that is being led by Iran, which is trying to set the region alight," the military said. It vowed to "use all of the capabilities at our disposal to ensure the security of Israeli civilians."
Speaking at a press conference at theandnbsp;Ministryandnbsp;of Defense inTel Aviv, Gantz paid tribute to cooperation among intelligence agencies, and to the navy, which he said led the operation "professionally and resolutely."
He said the IDF is engaged in combating arms smuggling in the north and south. "This requires a widespread intelligence effort, and, from time to time, active operations that we must take at the appropriate level. We call this the 'war between wars,' and we try to lessen the heavy threats that mainly come from Iran and its Al-Qud Force," the chief of staff said.
"We've been following this arms shipment for a long time," Gantz said, describing the intelligence behind the operation as "impressive. Today, we are harvesting the fruit of this intelligence. I'd like to thankandnbsp;Military Intelligence, Naval intelligence, and the Navy for the cooperation that allowed us to carry out a concrete, operational step," he added.
"This is one of many operations. We thwarted a weapons smuggling effort to Gaza, and at the same time, we exposed the reality of Iranian arms smuggling, as it is happened," Gantz said.
He said the rockets would have had a "very serious impact on Israeli territory" had it reached Gaza. "I'm very pleased we were able to stop it," Gantz stated.
Hamas, Islamic Jihad, and smaller groups are constantly working to build up their rocket arsenal, and are believed to have several thousand short range rockets that threaten southern cities and dozens of medium-range rockets that can reach greater Tel Aviv orandnbsp;Jerusalem.
By the end of 2013, Hamas was estimated by Israeli intelligence to possess 5000 short-range rockets and dozens of medium-range rockets, placing 70 percent of Israeli civilians in its range.
Gaza today has some 25,000 armed fighters. Of those, 16,000 belong to Hamas divisions. The Islamic Jihad has 5,000 fighters, split up into five divisions, and is armed with more than 2,000 rockets. Smaller terror groups have over 4,000 terrorists among their ranks, and are armed with dozens of rockets, as well as a large quantity of light arms.
In addition to replenishing its rocket arsenal, Hamas is trying to create capabilities to launch terror attacks, and possesses anti-aircraft missiles as well.
Last month, IDF Chief of Staff Lt.-Gen. Benny Gantz acknowledged that Israel was keeping a close eyes on developments in Gaza, and warned Hamas that it would "regret" any decision to attack Israel.