Purpose By analyzing urbanism products, development plans and the process of modernization in Iran, the purpose of this paper is to critically trace the effect of dictatorial control on urbanism and the emergence of government-imposed urban segregation. Design/methodology/approach The main body of this work is concentrated on studying the history of urbanism in Iran, of which collecting data and descriptions played a crucial role. To prevent the limitations associated with singular methods, the methodology of this research is based on methodological triangulation (Denzin, 2017). With the triangulation scheme, the data are gathered by combining different qualitative and quantitative methods such as library, archival and media research, online resources, non-participatory observation and photography. For the empirical part, the city of Tehran is selected as the case study. Moreover, individual non-structured interviews with the locals were conducted to gain more insights regarding the housing projects. Findings The results reveal that despite the intense propaganda, the regime policies barely mentioned the urban poor. With the rise of new principles of architecture and urban planning, the regime tried to promote the image of an updated society; restructuring of the urban space was part of this process. However, the majority of the urban projects disregarded the financial ability of low-income groups and eventually benefited only the middle and upper classes. Also, by imposing a physical distance, low-income neighborhoods were located in the south in order to marginalize the urban poor who were in contrast with the idea of a modern city. Under these circumstances, severe economic inequality was provoked, which to this day has transformed into a complex socio-spatial segregation. Originality/value The works of general historical studies are not concentrated on urbanism and urban researchers have mostly focused on urbanism products during different periods, regardless, of the importance of urbanism as a tool in the service of hegemony. In other words, the majority of existing research investigates the evolution of urbanism and architecture in modern Iran, by questioning “what has been built?” and has ignored to trace the beneficiaries of the urban projects and to question “built for whom?”. Moreover, urbanism under the government of Mossadegh (1951–1953) has been largely overlooked, which could be due to his short time as Prime Minister of Iran. Mossadegh’s government was the first democratic government in Iran; hence investigating the policies used in this period has a great importance.