“The sanctions are an opportunity for us,” Mr. Mohammed said in a rare interview in Tehran. “We have managed to fill the void left by foreign companies.”

After Total SA pulled out of a $5 billion gas deal last year and China declined to fill the breach left by the French oil giant because of fears of U.S. sanctions, Mr. Mohammed pledged that Khatam would step in to help keep the project afloat. The Guard is also in talks to develop a giant offshore oil field in the Persian Gulf and to build a refinery in western Iran after both projects failed to attract foreign investors in the current business climate, according to Khatam and Iranian government officials.

The role of buttressing Iran’s economic defenses makes Mr. Mohammed the commercial counterpart to Gen. Qassem Soleimani, commander of the elite Quds Force responsible for the Revolutionary Guard’s international operations. Mr. Mohammed is at the heart of efforts to ensure Iran generates the revenue it needs to defend the Islamic Republic and maintain its clout abroad by funding regional armed groups.

The U.S., for its part, wants to roll back Iran’s influence in the Middle East and sees the Guard as a root cause for tensions in the region.

Last month, the Guard shot down a U.S. drone, prompting the U.S. to consider a retaliatory strike before backtracking at the last minute.

In April, the U.S. designated the Guard as a terrorist group, in part to deter foreign companies from doing business with it. Those who do may be barred from the U.S. financial system, have their American accounts frozen and face prosecution.

U.S. sanctions have denied “tens of billions of dollars in revenues for the IRGC to launch attacks directly or indirectly,” Brian Hook, the U.S. special representative for Iran, told a press conference on June 21 in Riyadh, Saudi Arabia.

Though it was formed as a military organization devoted to defending the Islamic Republic, the Revolutionary Guard has developed into a major commercial force in Iran, with a dominant role in sectors including oil and gas, construction and telecommunications. Mr. Mohammed has worked to present a business-friendly face for the Guard.

But private Iranian companies worry the group will squeeze them out and complain that the Guard is harder to deal with than other private companies because its paramilitary role gives it a competitive advantage over more qualified businesses.

“The government can’t just ignore them,” said one Tehran oil executive whose privately held company does business with Khatam.

Despite its muscular approach, Khatam also doesn’t have the capacity to take over from big foreign companies, private executives say.

In southern Iran’s Pars oil field, for instance, “Khatam doesn’t have the capability to replace Total, but OIEC could,” the executive said, referring to one of Iran’s largest private oil companies now facing competition from Khatam.

As a result, Iranian executives said, when Khatam wins large projects, it often subcontracts elements of it to private companies on unfavorable terms.

In a May interview with CBS, Secretary of State Mike Pompeo compared IRGC business entities to “a mafia family” and said designating the Revolutionary Guard as a terrorist organization would squeeze its ability to finance terrorism.

“The IRGC has penetrated the construction industry, big pieces of the Iranian economy,” Mr. Pompeo said. “So this designation permits us to go after those places where there’s real wealth creation opportunity.”

Mr. Mohammed sees the Guard working with private companies to rescue Iran’s distressed economy as foreign investors pull back: “Like prayer beads,” he said, “where the beads are private companies and we are the string holding them together.”

In a twist, Washington’s efforts to isolate the Islamic Republic have undermined President Hassan Rouhani’s own push to curb the Guard’s power inside Iran. Since taking office in 2013, Mr. Rouhani’s administration encouraged foreign and domestic investors to expand in the transport and oil industry, where the Guard has stakes. But when the U.S. pulled out of the nuclear deal and reimposed sanctions, foreign investors left and Iran’s private sector suffered, leaving an opening for the Guard to expand its economic footprint.

The Guard has undergone changes of its own, such as installing market-minded executives like Mr. Mohammed atop Khatam and moving more into the economic mainstream.

Mr. Mohammed’s predecessor was a veteran general of the 1980-88 war with Iraq, Brig. Gen. Ebadollah Abdollahi, who wore the Guard’s trademark green uniform and gave bellicose speeches against the Islamic Republic’s adversaries.

At a recent oil exhibition in Tehran, Mr. Mohammed signaled a clear shift in corporate style. Gone were the military uniforms worn by officials who in previous years occupied the front row of Khatam’s press conference. Under its new leader, Khatam personnel were clad in dark navy suits, light-pink shirts and, as is customary in Iran, no ties. At the press conference, journalists were seated like executives at a board meeting.

“It’s time we start a new economic approach,” Mr. Mohammed said in the interview when asked why he thought he had been tapped to replace a battle-hardened military commander at the helm of the company.

Mr. Mohammed is part of a younger generation of executives who have put an emphasis on management efficiency rather than ideological fealty to the Guard, which he joined as a student more than three decades ago. He later earned a Ph.D. in civil engineering and headed a Guard company that built dams in western Iran.

Before taking his current job in October, Mr. Mohammed led the Guard-controlled entity Atlas of Iranians into upscale residential and commercial developments, including the yet-to-be-completed Atlas Mall, a 19-story shopping center in Tehran meant to include gourmet restaurants and imported luxury brands when it opens, according to plan, in November. The courting of consumers yearning for escape from Iran’s gloomy economic reality is captured in the mall’s advertising catchphrase: “The Sweet Life.”

A similar theme of escapism runs through other projects Mr. Mohammed launched for Atlas of Iranians, including a luxury hotel in the Iranian holy city of Mashhad that is decorated with Walt Disney cartoon characters. The company has also unveiled a beachside residential complex on tropical Kish Island overlooking a golf course.

Mr. Mohammed installed Starbucks -style coffee shops at his malls in lieu of the real chain, which—like other global brands such as McDonald’s and Pizza Hut—has spawned knockoff versions in Tehran because it can’t do business in Iran.

Under Mr. Mohammed, Atlas of Iranians declared an operating profit of 647 billion rials ($15.4 million) in the six months through July 2018, reversing a loss of 275 billion rials from the same period a year earlier. Mr. Mohammed was in charge during the whole period, when investments to build malls in northern and western Iran started to yield income.