Ayatollah Khomeini issues a religious edict (fatwa) ordering Muslims to kill British author, Salman Rushdie, for his novel, 'The Satanic Verses', considered blasphemous to Islam.
Ayatollah Khomeini dies. On 4 June, President Khamene'i is appointed as new supreme leader.
August - Ali Akbar Hashemi-Rafsanjani is sworn in as the new president.
November - The US releases 567 million dollars of frozen Iranian assets.
Iran remains neutral following Iraq's invasion of Kuwait.
A major earthquake strikes Iran, killing approximately 40,000 people.
Iran and Iraq resume diplomatic ties.
US imposes oil and trade sanctions over Iran's alleged sponsorship of "terrorism", seeking to acquire nuclear arms and hostility to the Middle East process. Iran denies the charges. Mohammad Khatami
Mohammad Khatami wins the presidential election with 70% of the vote, beating the conservative ruling elite.
Iran deploys thousands of troops on its border with Afghanistan after the Taleban admits killing eight Iranian diplomats and a journalist in Mazar-e Sharif.