The relationships between Islam and the West have become an important issue in the international world until today. Islam and Muslim countries are part of the factors which influenced the political dynamics in the world. In this regard, the Islamic Revolution in Iran in 1979 is one of the major issues that contributed to the shaping the relationship between Islam and the West, even until to date. This is because this revolution has inspired the emergence Islamic movements around the world and triggered anti American sentiment among Muslims. This revolution also shaped the perception about the threat from Islamic fundamentalism in the West. This article will analyze the back- ground and the context of the Islamic Revolution in Iran and its impacts on the United States, the Soviet Union, and the Arab states. It will argue that the Islamic Revolution become the major threat for all the countries because Iran has placed its revolution as the asset that would be exported to other countries. This revolu- tion has challenged Western interests in the Middle East particularly on oil and natural gas supplies. The Islamic revolu- tion also threatened the authoritarian regimes in the Middle East which often oppressed their people in the name of Islamic legitimacy.