In a letter published in the state-owned IRAN daily, the authorities also stated that men should not sell women's underwear, and advised shopkeepers against showing models with neckties and bow-ties, which are considered Western and un-Islamic.
Iranian officials have issued similar warnings in the past, but have ramped up their campaign against Western influence since President Mahmoud Ahmadinejad came to power in 2005.
Wednesday's warning also reiterated the government's ban on displaying immoral pictures. The letter did not provide specifics, but such statements usually refer to photos of Western celebrities, music bands or words in English.
The police urged the union of dress shop owners to confront stores that violate the ban in the aim of "safeguarding religious values and the Islamic revolution."
Many, however, fear that the ban on Western clothes could be used by hard-liners in the government to crack down on supporters of the country's more liberal, pro-reform opposition which has challenged Ahmadinejad's re-election victory in June as fraudulent.
The opposition and its supporters led street protests against the election results, presenting the cleric-led regime with its biggest challenge since the 1979 Islamic Revolution.
After the 1979 revolution that brought Iran's clerics to power, women were required to cover their hair and urged to wear a bulky garment known as a chador, a traditional head to toe robe.