In his maiden speech to the U.N. General Assembly, Sarkozy said: "There will be no peace in the world if the international community falters in the face of nuclear arms proliferation."
Iran was entitled to nuclear power for civilian purposes, he said, "but if we allow Iran to acquire nuclear weapons, we would incur an unacceptable risk to stability in the region and in the world".
In a broader warning against the dangers of appeasement, the new French leader said: "Weakness and renunciation do not lead to peace. They lead to war."
Iran insists its nuclear program is for peaceful purposes, but the West suspects the Islamic Republic of enriching uranium to develop a nuclear weapons capability.
Underlining French support for tougher sanctions against Tehran, sought by the United States but opposed by Russia and China, Sarkozy said: "We can only resolve this crisis by combining firmness with dialogue."
In an interview with the New York Times published on Monday, Sarkozy said that if the U.N. Security Council was unable to agree on further financial sanctions, the European Union should take its own measures to raise pressure on Iran.
French Foreign Minister Bernard Kouchner caused an outcry last week by saying if diplomacy failed to stop Iran's nuclear program, the world should prepare for the worst -- war.
But Sarkozy appeared to deliver the same message in a coded form, without mentioning the possibility of military action to prevent Iran achieving a nuclear capability.