Biden said the United States should set up a dedicated channel for banks and other companies to operate in Iran and issue licenses for the sale of pharmaceuticals and medical devices.
The former vice president also called for guarantees to aid groups that they will not be penalized for operating in Iran -- and said Tehran should reciprocate by freeing detained Americans.
Biden said that President Donald Trump's "maximum pressure" campaign on Iran, which includes sweeping sanctions, had "badly backfired" by encouraging aggression from the clerical regime.
"It makes no sense, in a global health crisis, to compound that failure with cruelty by inhibiting access to needed humanitarian assistance," Biden said in a statement.
"Artificially limiting the flow of international humanitarian assistance to pursue a political point will not only allow the Iranian government to deflect responsibility for its own botched response, it will increase the threat this virus poses to the American people, now and in the future," he said.
His appeal came a day after his rival for the nomination, Bernie Sanders, led left-leaning lawmakers in calling for a lifting of US sanctions on Iran, where more than 3,100 people have died from COVID-19.
Biden had faced criticism from Sanders supporters by hesitating in a television interview on Sunday from saying if he favored easing sanctions on Iran.
The Trump administration has proposed US aid to Iran but offered few details and has kept expanding sanctions.
The administration insists it has never targeted humanitarian goods, but few banks or exporters outside of China are willing to risk US sanctions by doing business in Iran.
Trump withdrew from an accord sealed by former president Barack Obama's administration, in which Biden was vice president, that promised sanctions relief to Iran in return for denuclearization.
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