Iran is experiencing the third phase of demographic transition (low levels of birth and death), following a sharp fertility decline experienced during 1986-1996 period and is still underway. Using the analytic framework of Davis and Black, we examined the impact of social development and contraceptive prevalence, respectively as the structural and proximate determinants, on rapid fertility decline in Iran. We found that the social development level of provinces had a great impact on fertility decline through contraceptive prevalence indirectly. The cluster analysis of social development indices in 1986 and 1996 revealed that 15 out of 24 provinces of Iran moved from a lower developed status in 1986 to a moderate or a higher developed status in 1996 (twelve provinces moved from a “less developed” state in 1986 to a “moderate developed” state in 1996, and three provinces moved from a “moderate developed” state in 1986 to a “developed” state in 1996). In addition, regarding to the social development levels and fertility rates, the gap between provinces decreased during 1986-1996. That is, a shift from heterogeneous to more homogeneous patterns of social development and fertility occurred across Iran’s provinces during 1986-1996