The group, called Jundullah, is made up of members of the Baluchi tribe and operates out of the Baluchistan province in Pakistan, just across the border from Iran.
It has taken responsibility for the deaths and kidnappings of more than a dozen Iranian soldiers and officials.
U.S. officials say the U.S. relationship with Jundullah is arranged so that the U.S. provides no funding to the group, which would require an official presidential order or "finding" as well as congressional oversight.
Jundullah has produced its own videos showing Iranian soldiers and border guards it says it has captured and brought back to Pakistan.
The leader, Regi, claims to have personally executed some of the Iranians.
"He used to fight with the Taliban. He's part drug smuggler, part Taliban, part Sunni activist," said Alexis Debat, a senior fellow on counterterrorism at the Nixon Center and an ABC News consultant who recently met with Pakistani officials and tribal members.
"Regi is essentially commanding a force of several hundred guerrilla fighters that stage attacks across the border into Iran on Iranian military officers, Iranian intelligence officers, kidnapping them, executing them on camera," Debat said.
Most recently, Jundullah took credit for an attack in February that killed at least 11 members of the Iranian Revolutionary Guard riding on a bus in the Iranian city of Zahedan.
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