The Sangan mining district, with a proven reserve of 1 Gt of 35 to 60% iron, is a world-class iron ore district in Iran, and located in the far eastern part of the Cenozoic Alborz Magmatic Arc. The east–west trending Sangan mining district consists of fourteen iron deposits, spatially associated with the Eocene Sarnowsar composite intrusion (syenite to syenogranite and granite), subvolcanic (quartz monzonite and syenite) and volcanic rocks (andesite and rhyolite). Syenogranite and quartz monzonite rocks in the Dardvay skarn are classified as oxidized I-type granites, with an average SiO2 content of 69.25–65.91 wt%, Al2O3 content of 13.71–13.98 wt%, total alkali (Na2O + K2O) content of 8.55–8.02 wt%, respectively. LA-ICP-MS zircon U-Pb dating on three syenogranite samples yield U-Pb ages of 39.6 ± 0.7 Ma, 39.3 ± 0.3 Ma, and 39.1 ± 0.4 Ma, whereas two zircon samples from skarn zones yield U-Pb ages of 39.7 ± 0.4 Ma and 39.5 ± 0.4 Ma, indicating a Middle Eocene mineralization event closely related to the Sarnowsar syenogranite. Zircon grains from a host rhyolite yield a U-Pb isochron age of 40.2 ± 0.4 Ma and previous published age for quartz monzonite is 42.3 ± 0.8 Ma. The Dardvay deposit is developed along the contact of the Sarnowsar syenogranite with dolomitic limestone with distinct exoskarn and endoskarn zones. The endoskarn zone is limited in extent, whereas the exoskarn is more extensive and includes pyroxene and garnet skarn zones close to the Sarnowsar syenogranite and epidote-phlogopite-actinolite skarn distal to it. The composition of clinopyroxenes plot along the diopside-hedenbergite join in the diopside and augite fields. The garnet composition ranges from Ad60Gr38 to Ad40Gr59. Three main paragenetic stages of skarn formation and ore deposition have been recognized at the Dardvay deposit: (1) a prograde stage developed at 380° to >550 °C with a fluid salinity between 16 and 66 wt% NaCl equivalent, (2) a retrograde stage which formed at 175°–325 °C with fluid salinity of 2.3 and 33.4 wt% NaCl equivalent, and (3) a post-ore-stage with quartz veins that developed at 180°–300 °C with salinity range of 8.3 to 17.7 wt% NaCl equivalent. Oxygen isotope analyses were conducted on magnetite from retrograde stage, resulting in a narrow variation of δ18O between 1.2 and 1.6 per mil with δ18O fluid of 10.3 to 10.7 per mil. Fluid inclusion and oxygen isotope analyses suggest that a possible mechanism for magnetite deposition is boiling and dilution with surface (meteoric) fluids, which together with increasing pH and decreasing T explains iron ore formation.