The “rentier state” has become one of the most commonly used concepts in Middle East studies. It has gained wide usage to characterize the nature of the state in those countries that receive, on a regular basis, substantial amounts of external economic rent in the form of oil-revenues, and to explain their economic, social and political trajectory. With the ascendance of democratization studies in the past two decades, rentier state theory (RST) has become particularly fashionable in explaining the lack of democratization in oil-exporting countries like Iran. RST provides three main reasons for why oil hinders democratization. First, oil-revenues make states autonomous from society and citizens become less inclined to demand accountability from the state and participation in decision making. ‘No taxation, no representation,’ is the assumption. Second, oil income provides the state the financial means to create a repressive apparatus that can be effectively used against those who do demand accountability. Third, oil makes obsolete the need for structural economic changes that are associated with industrialization, and which stimulate democratization by changing the class structure and creating an educated and specialized population. However, recent studies have questioned the claim that oil-revenue is an obstacle for democratization or have revised the causal mechanisms involved, arriving at new versions of “rentier state”theory. This paper revisits RST and the recent debates about its shortcomings and validity. Arguing that part of the problem of research on rentier states resides with regression methodology, leading to confusions about correlation and causation, this paper takes Iran as a case study for a qualitative analysis that critically engages with RST in its classic and new forms. The questions this paper aim to answer are as follow: What is the validity of generalizing RST to countries that except being oil-exporters vary in their economic, social, and political structures and their relations with the international state system and the world economy? What is the relationship between oil-exports, industrialization and Iran’s general economic development in a global perspective? Can state reliance on oil-revenues in Iran explain autocratic rule in a historical perspective? Does it for instance explain variation in the level of autocracy and the rise of pro-democratic movements in the 20th and 21st centuries? Do the mechanisms that according to RST explain the negative effects of oil-revenue on democratization, hold ground in the case of Iran?