Over the last forty-one years, Iran has been under constant unilateral and multilateral economic sanctions related to military, nuclear, and human rights issues. Although the sanctions have varied in terms of their costs to the economy, they have contracted Iran’s GDP, increased economic stagflation, caused surging unemployment and inflation, and pushed many Iranians below the poverty line. This paper investigates how the two most recent episodes of economic sanctions imposed between 2012-2015 and 2018-2020 have reduced the size of the middle class and increased its vulnerability to poverty. Using a vulnerability-to-poverty approach, this paper defines the middle class as a segment of society with a level of income that is safe from falling into poverty. The lower threshold is identified as a certain percentage above the absolute poverty line which rescues individuals from falling into poverty, and the upper threshold is below a $50 purchasing power parity (PPP). In terms of the absolute poverty line, the paper adopts a basic needs approach by estimating the cost of a bundle of food and other essential goods that is necessary for the physical survival and well-being of one person in each subgroup (urban/rural). The paper also employs a logistic model to estimate how vulnerability to poverty varies among households. Regarding the data source, the paper relies on Iran’s Households Income and Expenditure Survey (HIES), which is administered by the Iran Statistical Center and contains detailed information on expenditures, incomes, assets, employment, and demographics of approximately 38,000 households in both urban and rural areas. This study is among the first to investigate the impact of economic sanctions on the size of the middle class and its vulnerability to poverty in Iran. The study contributes to the literature on both economic sanctions and macroeconomic shocks, specifically how an exogenous shock like sanctions adversely affects various segments of society in different ways and how households react to this shock by smoothing their consumption. The results of the study offer insight into the coping strategies of households faced with economic sanctions. The results also provide Iranian policymakers with options for adopting appropriate protection measures and addressing the problems of the vulnerable segments of society.