Ruhollah Khomeini in the context of "Emblem of Iran"

An Islamic state has a form of government based on sharia. As a term, it has been used to describe various historical polities and theories of governance in the Islamic world. As a translation of the Arabic term dawlah islāmiyyah (Arabic: دولة إسلامية) it refers to a modern notion associated with political Islam (Islamism). Notable historical examples include the first Islamic state in Medina, established by the prophet Muhammad, and the Arab caliphates which continued under his successors, such as the Rashidun and Umayyads.

The concept of the modern Islamic state has been articulated and promoted by ideologues such as Rashid Rida, Mullah Omar, Abul A'la Maududi, Ruhollah Khomeini, Israr Ahmed, Sayyid Qutb and Hassan al-Banna. Implementation of Islamic law plays an important role in modern theories of the Islamic state, as it did in classical Islamic political theories. However, most of the modern theories also make use of notions that did not exist before the modern era.

The Iranian Revolution or the Islamic Revolution was a series of events that culminated in the overthrow of the Pahlavi dynasty in 1979. The revolution led to the replacement of the Imperial State of Iran by the Islamic Republic of Iran, as the monarchical government of Shah Mohammad Reza Pahlavi was superseded by Ruhollah Khomeini, an Islamist cleric who had headed one of the rebel factions. The ousting of Mohammad Reza Pahlavi, the last Shah of Iran, formally marked the end of Iran's historical monarchy.

In 1953, the CIA- and MI6-backed 1953 Iranian coup d'état overthrew Iran’s democratically elected Prime Minister, Mohammad Mossadegh, who had nationalized the Anglo-Persian Oil Company. The coup reinstated Mohammad Reza Pahlavi as an absolute monarch and significantly increased United States influence over Iran.

The Arab Cold War (Arabic: الحرب العربية الباردة al-ḥarb al-`arabiyyah al-bāridah) was a political rivalry in the Arab world from the early 1950s to the late 1970s or early 1990s and a part of the wider Cold War. It is generally accepted that the beginning of the Arab Cold War is marked by the Egyptian Revolution of 1952, which led to Gamal Abdel Nasser becoming president of Egypt in 1956. Thereafter, newly formed Arab republics, inspired by revolutionary secular nationalism and Nasser's Egypt, engaged in political rivalries with conservative traditionalist Arab monarchies, influenced by Saudi Arabia. The Iranian Revolution of 1979, and the ascension of Ayatollah Ruhollah Khomeini as leader of Iran, is widely seen as the end of this period of internal conflicts and rivalry. A new era of Arab-Iranian tensions followed, overshadowing the bitterness of intra-Arab strife.

Nasser espoused secular pan-Arab nationalism and socialism as a response to the perceived complicity of the Arab monarchies in Western interference in the Arab world. He also opposed the monarchies' support of rentierism and Islamism. Later Nasser embraced the Palestinian cause, albeit within the framework of pan-Arabism. After Egypt's political victory in the 1956 Suez Crisis, known in the Arab world as the Tripartite Aggression, Nasser and his associated ideology quickly gained support in other Arab countries, from Iraq in the east to French-occupied Algeria in the west. In several Arab countries, such as Iraq, North Yemen and Libya, conservative regimes were overthrown and replaced by revolutionary republican governments. Meanwhile, Arab countries under Western occupation, such as Algeria and South Yemen, experienced nationalist uprisings aimed at national liberation. At the same time, Syria, which was already strongly Arab nationalist, formed a short-lived federal union with Egypt called the United Arab Republic. Several other attempts were made to unite the Arab states in various configurations, but all attempts were unsuccessful.

Mohammad Reza Pahlavi (Persian: محمدرضا پهلوی [mohæmˈmæd reˈzɒː pæhlæˈviː]) (26 October 1919 – 27 July 1980) was the Shah of Iran from 1941 to 1979. He succeeded his father Reza Shah and ruled the Imperial State of Iran until he was overthrown by the 1979 Islamic Revolution led by Ruhollah Khomeini, which abolished the Iranian monarchy to establish the Islamic Republic of Iran. In 1967, he took the title Shahanshah (lit. 'King of Kings'), and also held several others, including Aryamehr (lit. 'Light of the Aryans') and Bozorg Arteshtaran (lit. 'Grand Army Commander'). He was the second and last ruling monarch of the Pahlavi dynasty.

During World War II, the Anglo-Soviet invasion of Iran forced the abdication of Reza Shah and succession of Mohammad Reza Shah. During his reign, the British-owned oil industry was nationalized by the prime minister Mohammad Mosaddegh, who had support from Iran's national parliament to do so; however, Mosaddegh was overthrown in the 1953 Iranian coup d'état, which was carried out by the Iranian military under the aegis of the United Kingdom and the United States. Subsequently, the Iranian government centralized power under the Shah and brought foreign oil companies back into the country's industry through the Consortium Agreement of 1954.

The Guardianship of the Islamic Jurist (Persian: ولایت فقیه, romanized: Velâyat-e Faqih, also Velayat-e Faghih; Arabic: وِلاَيَةُ ٱلْفَقِيهِ, romanized: Wilāyat al-Faqīh) is a concept in Twelver Shia Islamic law which holds that until the reappearance of the "infallible Imam" (sometime before Judgement Day), the religious and social affairs of the Muslim world should be administered by righteous Shi'i jurists (Faqīh).

Wilāyat al-Faqīh is associated in particular with Ruhollah Khomeini and the Islamic Republic of Iran. In a series of lectures in 1970, Khomeini advanced the idea of guardianship in its "absolute" form as rule of the state and society. This version of guardianship now forms the basis of the Constitution of the Islamic Republic of Iran, which calls for a Guardian Jurist (Vali-ye Faqih, Arabic: وَلِيٌ فَقِيهٌ, romanized: Waliyyun Faqīh), to serve as the Supreme Leader of that country. Currently, this role is held by Ayatollah Khamenei.

The supreme leader of Iran, also referred to as the supreme leader of the Islamic Revolution, but officially called the supreme leadership authority, is the head of state and the highest political and religious authority of Iran (above the president). The armed forces, judiciary, state radio and television, and other key government organizations such as the Guardian Council and Expediency Discernment Council are subject to the supreme leader. According to the constitution, the supreme leader delineates the general policies of the Islamic Republic (article 110), supervising the legislature, the judiciary, and the executive branches (article 57). The current lifetime officeholder, Ali Khamenei, has issued decrees and made the final decisions on the economy, the environment, foreign policy, education, national planning, and other aspects of governance in Iran. Khamenei also makes the final decisions on the amount of transparency in elections, and has dismissed and reinstated presidential cabinet appointees.

The office was established by the Constitution of Iran in 1979, pursuant to Ayatollah Ruhollah Khomeini's concept of the Guardianship of the Islamic Jurist, and is a lifetime appointment. Originally the constitution required the supreme leader to be Marja'-e taqlid, the highest-ranking cleric in the religious laws of Usuli Twelver Shia Islam. In 1989, however, the constitution was amended and simply asked for Islamic "scholarship" to allow the supreme leader to be a lower-ranking cleric. As the Guardian Jurist (Vali-ye faqih), the supreme leader guides the country, protecting it from heresy and imperialist predations, and ensuring the laws of Islam are followed. The style "Supreme Leader" (Persian: رهبر معظم, romanized: rahbar-e mo'azzam) is commonly used as a sign of respect although the Constitution designates them simply as "Leader" (رهبر, rahbar). According to the constitution (Article 111), the Assembly of Experts is tasked with electing (following Ayatollah Khomeini), supervising, and dismissing the supreme leader. In practice, the Assembly has never been known to challenge or otherwise publicly oversee any of the supreme leader's decisions (all of its meetings and notes are strictly confidential). Members of the Assembly are elected by people in elections, and are approved by bodies (the Guardian Council) whose members are appointed by the supreme leader or appointed by an individual (Chief Justice of Iran) appointed by the supreme leader.

Shia Islamism is the implementation of Shia Islam in politics. Most study and reporting on Islamism has been focused on Sunni Islamist movements. Shia Islamism, a previously very small ideology, gained in popularity after the Iranian Revolution (1978–1979) led by Ruhollah Khomeini, whose Shia Islamist policies became known as Khomeinism. Khomeini's form of Islamism was unique not only for being a powerful political movement which successfully came to power, but for having completely swept away the old regime, created a new one with a new constitution, new institutions and a new concept of governance (the velayat-e-faqih). A historical event, it changed militant Islam from a topic of limited impact and interest, to one that few inside or outside the Muslim world were unaware. However, there are also Shia Islamist movements outside of Khomeinism, such as the Islamic Dawa Party of Muhammad Baqir al-Sadr and the Sadrist Movement of Muqtada al-Sadr.

Though a minority of the world Muslim community, Twelver Shias form the majority of the population in the countries of Iran, Iraq, and Azerbaijan, and substantial minorities in Afghanistan, Bahrain, India, Lebanon, Kuwait, Pakistan, Qatar, Syria, Saudi Arabia and the United Arab Emirates.