International relations are determined by systemic and structural factors at the global, regional and state/domestic levels. Inter-state relations require common interests, shared goals, inter-related threat perception and eminent security challenges. Indo-Iranian relations have been on a progressive trajectory since the beginning of current century; their relations are focussed on political, economic, security and strategic spheres. As an emerging major power, India intends to enhance its influence across regions. This paper attempts to examine how Indo-Iranian relations have shaped up over the years. How convergence of interests by these two far-off neighbors have developed to join and cooperate in economic, political and social domains. For Pakistan, any development on its eastern and western borders holds important bearing on its national security; therefore, what new challenges are posed by Indo-Iranian relations in the changing regional environment of South Asia. [ABSTRACT FROM AUTHOR]