Developments in the Middle East in the past decades, and especially in the past few years, have drawn the world’s attention to this region. Never since the break-up of the Ottoman Empire at the beginning of the 20th century has the region been so volatile and explosive. While the Israeli-Palestinian conflict continues to have a deciding effect on the Middle East, other issues have appeared, further complicating the politics of the region. The stunning socio-political developments in the Arab world during the past year, which started in Tunisia and spread to Egypt, Yemen, Libya and Bahrain are still unfolding and will permanently change the Arab World. Where does Iran fit into the political dynamics of the Middle East in these turbulent times? This paper attempts to answer that question. After a review of the recent developments in the Arab world, it examines the Islamic Republic’s position in the region in the light of the Islamic Revolution in Iran in 1979, the breakup of the Soviet Union and subsequent developments in Central Asia, the U.S.-led invasions of Afghanistan and Iraq as well as the conflict between Israel and Hezbollah. The paper suggests that the changing geopolitics of the region has positioned Iran in a relatively stronger position vis-à-vis the Sunni-Shi’a debate. It further suggests that three decades after its Islamic Revolution, Iran has matured. This is especially true in the wake of the rising extremist tendencies and groups such as al-Qa’ida in the region. Once the shorter term issues are resolved, Iran can have a moderating influence on the dynamics of the region.