Team Melli lost to the UAE 29-26 at the Shaikh Saad Al-Abdullah Sports Hall Complex in Kuwait City.
On Thursday, Iran drew 24-24 with South Korea but failed to book a place in the competition’s semis due to goal difference.
Iran started the campaign with a 53-21 win over New Zealand in Group A but lost to Bahrain 22-20.
Iran beat Kuwait 28-24 in Group 2 and lost to Qatar 31-25 in its second match.
In the last group match, Team Melli was held to a 24-24 draw by Korea.
The 2020 Asian Men's Handball Championship is the 19th edition of the championship held under the aegis of Asian Handball Federation in Kuwait City, Kuwait from January 16 to 27.
The top four teams have qualified for the 2021 World Men's Handball Championship.