There is widespread agreement among Turkish academics and in the media that Turkey and Iran have several difficult problems to be resolved in their bilateral relations. This article seeks to outline what these problems are and what has caused these problems in relations between the two countries; as well as critically analyzing the nature and severity of these problems. Of especially critical importance, is the extent to which domestic pressures have been influential in the development of Turkey’s foreign policy towards Iran. Do Turkish decision-makers decide who their rivals are on the basis of intrinsic national interests, or have they merely been reacting to images projected by self-interested politicians and external actors? Is Turkey drifting into a potentially dangerous rivalry without sufficient reason to see Iran as a primary opponent? What has suddenly given formerly inward-looking Turkish politicians this newfound selfassurance that they can influence Iran in regional and international politics? What promise do Turkish-Iranian relations hold for the region? Can Turkey really contribute to regional security and stability? In this article, it is argued that Turkey’s policy towards Iran has become hostage to the worldview of Turkey’s governing elite, one that has demonstrated itself to be increasingly unable to successfully cope with political change on domestic, regional, and international levels. There is also a further argument that the legal, political and economic transformation in Turkish domestic landscape paved way for a more self-confident, dynamic, active and multidimensional policy in the Middle East. This new regional rhetoric and policy created more room to maneuver for Turkey in Turkish-Iranian relations, which accommodates both conflicting and coinciding interests in regional and international levels.