Iran, the ancient Persia, included at its height of power Asia Minor, Mesopotamia, Babylonia, and the mountainous lands east and south. Jews first came under Persian rule in 539 B.C.E. when King Cyrus conquered Babylonia. The Judean captives, exiled to Babylonia after the destruction of the Temple in 586 B.C.E., welcomed the Persian rulers. Forty thousand of them returned to Judea and rebuilt their homeland. For two centuries of Persian rule, the Jewish communities of Persian Babylonia flourished, and close links were maintained with the communities of Judea. In later centuries, when the Persian Empire fell successively under Greek, Parthian, and Arab domination, Jews continued to live in its territories, notably in the Babylonian cities of Sura and Pumbeditha, where great academies flourished and where the immense work of compiling the Talmud was completed in 500 C.E.

During the 12th century, there were large Jewish communities in the cities of Isfahan, Shiraz, and Hamadan, part of present-day Iran. Under the Safavid Dynasty from 1499 to 1736, Jews suffered severe discriminatory measures against them. Many converted to Islam, living secretly as Jews. Some fled to Afghanistan and Palestine where their descendants are still to be found. The Kadar Dynasty from 1795 to 1925 continued the harsh anti-Jewish policy of the Safavids. They considered the Jews ritually unclean, humiliated them, and taxed them heavily. Under this treatment, the Jewish community declined. In the late 19th century, the situation for Persian Jewry improved somewhat when Western European Jews interceded on their behalf. In 1898, the first school of the Alliance Isra