Perry is concerned Iran is not going to be swayed to drop its nuclear program.
The U.N. Security Council voted 12 to 3 on Wednesday to impose new sanctions on Iran. They will limit Iran's ability to obtain nuclear fuel processing. They also will step up inspections of ships suspected of transporting materials Iran could use to make nuclear bombs.
"Actions do have consequences, and today the Iranian government will face some of those consequences," President Barack Obama said.
Perry told members of the Commonwealth Club and San Jose rotary the U.N. sanctions were watered down. He believes Israel might attack Iran to destroy suspected nuclear facilities.
"If the international community led by the United States is not successful in stopping the Iranian nuclear bomb, they will take that action," he said.
Brazil and Turkey voted against the U.N. sanctions.
Perry said it appears they believe Iran is trying to create nuclear power, not weapons.
Iran's president, Mahmud Ahmadinejad, compared the Security Council resolution to a used handkerchief which should go into a garbage can.
Perry thinks Iran could end up supplying nuclear bombs to terrorists.
"They supply other weapons to Hezbollah, so the danger is they might extend that to the nuclear field as well," he said.
Perry warns that even a crude nuclear bomb detonated in a parked truck could kill 100,000 people.
"A terror group, if they had enough plutonium or enough enriched uranium could improve a nuclear device, which would be crude in its physical makeup, would still have an explosive power of 15,000 tons of high explosive," he said.
Perry is concerned that an already unstable Middle East will become more so if Israel decides to intervene.