TEHRAN, Young Journalists Club (YJC) - The accident occurred in the eastern city of Oss, near the German border.
Police said the cargo bike was electrically powered and had been transporting the children from a pre-school center to school when the accident occurred. There were numerous witnesses, including other school-age children, police said.
The two injured people have been taken to a nearby hospital, where they are in critical condition.
"We have informed the families involved of this terrible news," police said in a statement.
"We are investigating how this could have happened."