This article focuses on the development of the tobacco industry in Iran during the seventeenth and eighteenth centuries. It uses this discussion as an entry point to inquire about the early modern Iranian economy. Using a wide range of primary and secondary sources, the paper makes several key historiographical interventions. It explains what the development of a completely new agrarian industry meant in the Safavid state, and suggests that innovation and intensification may not have been completely absent in agriculture in the early modern period. In contrast to the way some of the available literature tends to argue, the essay points out that the Iranian economy may not have experienced continuous decline in all its sectors throughout the seventeenth and eighteenth centuries. In addition, this article contends that the tobacco industry helped bring about the rise and dominance of merchants and landowners in Iranian society, and with that the further development of mass consumption and ever-increasing cycles of production and accumulation that expanded the commercialization of agriculture, domestic and international trade networks, and Iran’s agrarian economy. The presentation in other words shows that the tobacco industry was anything but an unimportant sector of the Iranian economy. Its value during the first two centuries of its existence was enormous and can only be gleaned from the figures we have for the total revenue collected by the central government from the tobacco industry. The penetration and integration of tobacco (which was a New World crop) deep into the fabric of the Safavid economy made tobacco an unusual commodity—comparable only to certain types of food perhaps—whose production, distribution, and consumption would reflect the general characteristics of the economy as a whole. In following the story of tobacco in early modern Iran, the article shows how landowners and merchants worked in tandem to develop a new industry, how average Iranians took up the habit of consuming a non-essential product, and above all how the place of tobacco in society can tell us about mass production and accumulation of capital. The point is that the tobacco industry in the early modern period could not have functioned without large-scale capital investment in both domestic and long-distance trade, without the development of a consumer society inside the Safavid state, and without highly competitive distributive networks that took tobacco and other consumables to different parts of Eurasia.