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The tiny island is home to one of the most critical pieces of Iran's energy infrastructure.
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The US president said Kharg Island's military facilities were "totally obliterated" but that it had held off targeting its oil infrastructure.
Trump, however, warned that he would reconsider the decision not to target oil facilities on the island should Iran or others "do anything to interfere" with the safe passage of ships through the Strait of Hormuz - one of the world's most important shipping channels, located south of Iran's coast.
Iran's military said oil and energy infrastructure belonging to firms working with the US would "immediately be destroyed" should Kharg's oil infrastructure be attacked.
Kharg Island is a small rocky outcrop just 15 nautical miles (24km) off the coast of Iran.
Despite its size, it is one of the most critical pieces of Iran's energy infrastructure.
The US striking this small but vital island in the northern Gulf is like going for Iran's economic jugular vein.
Ninety percent of Iran's crude oil comes through a terminal on the island - transported through pipes from the mainland.
Very large tankers - capable of carrying up to 85 million gallons of oil - are able to come up to the island's long jetties to pick up the oil. The island's coast is close enough to deep waters, unlike the shallower coast of the mainland.
The tankers then come back down the Gulf and out of the Strait of Hormuz, to China - the main buyer of Iranian oil.
A terminal for the export of Iranian oil, the island provides a major source of revenue for the Islamic Revolutionary Guard Corps (IRGC).
On Friday, Trump said the US Central Command had "executed one of the most powerful bombing raids in the History of the Middle East and totally obliterated every MILITARY target in Iran's crown jewel, Kharg Island".
He added that, "for reasons of decency", he had "chosen NOT to wipe out the Oil Infrastructure on the Island
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