Authorities in the Darbandikhan region, home to 40,000 people, say the Daliya River dam spanning the Daliya River has not suffered any major cracks as a result of yesterday's earthquake.
The 7.3-magnitude quake hit on the Iraq-Iran border area on Sunday night, killing hundreds of people and injuring thousands of others.
Iran has reported at least 407 people killed and 3,950 injured, while in Iraq the quake killed 8 and injured 535 others, officials said.
The earthquake struck a border area 30km southwest of Halabja in Iraqi Kurdistan at around 9.20pm, the US Geological Survey (USGS) said.
As many as 50 families in Darbandikhan initially sought shelter with relatives outside the town according to reports by AFP. Authorities in Iraqi Kurdistan had called on the population in the southern area of the town to leave their homes, fearing that the Darbandikhan dam was at risk of bursting.
The dam is located in Sulaimaniyah province, where seven deaths have been reported, including four in Darbandikhan.