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Manssor Arbabsiar, 57, is pictured in this courtroom sketch in Manhattan Criminal Court in New York, Oct.17, 2012.STRINGER/Reuters

Former car salesman Manssor Arbabsiar pleaded guilty on Wednesday to conspiring with the Iranian military to kill the Saudi ambassador to the United States in a plot as lurid as any airport thriller.

Appearing at the New York federal court where he had been due to stand trial in January, the Iranian-American entered a surprise guilty plea. He faces up to 25 years in prison at his sentencing, which was set for Jan. 23.

Judge John Keenan asked Mr. Arbabsiar: "Is it true that about the spring of 2011 up until the fall of 2011 that you and your co-conspirators … who were officials in the Iranian military, that you agreed to cause the assassination of the Saudi Arabian ambassador to the United States?"

"Yes," he replied, pleading guilty to three counts.

Mr. Arbabsiar was arrested in September last year at New York's John F. Kennedy International Airport, triggering a major legal and diplomatic drama between Washington and Tehran, amid already tense relations.

He was charged along with co-defendant Gholam Shakuri, a senior member of the Iranian Revolutionary Guard's elite Quds Force, who remains at large.

They tried to hire a Mexican drug dealer for $1.5-million, first to kidnap the Saudi envoy, then, in a change of plan, to blow him up in a restaurant he frequented in Washington, Mr. Arbabsiar said.

He had arranged for $100,000 to be wired to the United States as a downpayment, not realizing that the supposed assassin he recruited was in fact working for the U.S. authorities.

"In Mexico we hired a person called 'Junior' who turned out to be an FBI agent," Mr. Arbabsiar said in court, although officials say "Junior" was in fact a Drug Enforcement Administration informant, not from the FBI.

A frail looking man with a grey beard and a huge scar across one cheek, Mr. Arbabsiar was brought in and out of the courtroom in handcuffs and kept under close watch while he sat at a table with his lawyers.

The former Texas car salesman, who has a grey beard and wore a dark blue prison smock and orange undershirt, seemed nervous and stumbled repeatedly in his answers during the plea procedure.

Asked his age, he looked confused and said, "58, I think."

When Judge Keenan pressured him to confirm clearly that he'd intended to murder the Saudi diplomat, Mr. Arbabsiar finally said: "No. Yes, yes."

Throughout, Mr. Arbabsiar alternated between casting worried looks around the courtroom and repeatedly smiling, including at the agents seated alongside the prosecutors.

In the run-up to what would have been the trial, the defendant underwent a psychological evaluation. However, defence lawyer Sabrina Shroff told the court Wednesday that nothing had been found to hold up the plea.

"We know of nothing that would address any issue," she said.

Iran has strongly denied any involvement in what the United States says was a plot by the Quds Force, Iran's covert external action unit, to kill the ambassador.

In a largely symbolic vote last November, the UN General Assembly demanded that Iran cooperate with the U.S. investigation into the plot.

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