Nowadays, fossil fuels are well known as a predominant source of energy in the planet. Located in the Middle East region, Iran holds one of the largest fossil fuel reservoirs in the world. The country has abundant oil and natural gas fields in various regions; some of them are shared between other countries and have not reached their operational capacity yet. Meanwhile, during recent years and due to global warming followed by environmental global contracts such as Kyoto protocol, using fossil fuels is being criticized to a large extent around the world. Therefore, the global interest has been focused toward clean energy resources. Furthermore, endowed with sundry geographical pattern throughout its land, Iran has adequate renewable energy potentials. So, there will be a serious paradox affecting its whole energy policy: more exploration and extraction of conventional fossil fuels or take advantage of renewable and sustainable energy resources? In this paper, energy structure of Iran is generally overviewed, followed by study of renewable energy potentials in various parts of the country. Afterwards, policy making in renewable energy market, systems, and applicable strategies are elaborated. Furthermore, a number of barriers obstructing the development path of renewable energy schemes and initiatives are presented and discussed in detail.