PSA "began the process of suspending the activities of its JVs, in order to comply with US law by August 6, 2018," when the restrictive measures are expected to be reinstated, the company's statement said.
The carmaker was among the first European enterprises, along with Renault, that hurried to Iran to meet the demand for new cars after restrictions were lifted in 2016.
Both French companies have signed cooperation agreements with Iran. PSA's deal was worth 700 million euro, while Renault pledged to make large investment into a new plant in the country to enhance its manufacturing capacity to 350,000 vehicles a year.
The move came after US President Donald Trump announced in early May that his country would exit the Iran nuclear deal and to re-impose the previously lifted sanctions on Iran, including secondary sanctions against countries that do business with the Islamic Republic.
PSA said it had applied to US authorities for a waiver, with the help of the French government, but the chances of avoiding sanctions are said to be "very slim."