Iran’s formal accession to the Shanghai Cooperation Organization in July 2023 is a pivotal structural shift in Eurasian geopolitics that aims to mitigate the effects of the West’s comprehensive sanctions regime by creating a parallel multilateral economic architecture. Using a comparative qualitative case study approach, this research examines six dimensions of Iran’s membership in the SCO, including its strategic dependence on China, its decline in regional status relative to the Arab Gulf states, and its distinct implications for five South Asian countries (India, Pakistan, Afghanistan, Bangladesh, Sri Lanka). Three new theoretical frameworks are presented: sanctioned state institutionalism, which emphasizes the disproportionate value of membership in multilateral institutions for countries under comprehensive sanctions; transit-oriented theory, which analyzes Iran’s irreplaceable geographical location on the international North-South corridor as a structural lever beyond political pressures; and dedollarization as a security strategy, which defines financial decoupling from the dollar system as a national security investment. The main findings show that SCO membership brings measurable benefits, including sustained oil exports to China averaging 1.43 million barrels per day and a potential 50 percent reduction in transit costs compared to the Suez Canal route; however, serious challenges remain, including structural imbalances in bilateral trade with China, incomplete implementation of the 25-year Comprehensive Partnership Agreement, and intense pressure on South Asian partners to choose between SCO opportunities and secondary US sanctions. The research suggests that the emigration of more than 1.5 million educated Iranians is the country’s deepest long-term structural vulnerability and that SCO membership is an effective strategic shift, not a comprehensive solution, whose maximization of benefits requires renegotiating with China on industrial parity, activating the North-South corridor, developing non-dollar financial instruments, and systematically investing in the knowledge-based economy.