One of the most dramatic changes in government in Iran's history was seen with the 1979 Iranian Revolution where Shah Mohammad Reza Pahlavi was overthrown and replaced by Ayatollah Ruhollah Khomeini. Autocratic monarchy was replaced by an Islamic Republic based on the principle of rule by Islamic jurists, (or "Velayat-e faqih"), where clerics serve as head of state and in many powerful governmental roles. A pro-Western, pro-American foreign policy was exchanged for one of "neither east nor west", said to rest on the three "pillars" of mandatory veil (hijab) for women, and opposition to the United States and Israel. A rapidly modernizing, capitalist economy was replaced by populist and Islamic economic and culture.
The leader of the revolution and founder of the Islamic Republic, Ayatollah Ruhollah Khomeini, was Iran's supreme leader until his death in 1989. He was followed by Ali Khamenei.
During the era of the Islamic Republic, Iran has grown from 39 million (1980) to 70 million people.
Some things remain much as they were under the monarchy. Iran has retained its status as a major regional power—it is far larger than any of its gulf neighbors, and possesses large reserves of gas and oil. Its national cohesion brought by a long history as a nation, strong central state government and its oil export revenues have brought it "respectable" levels of income, literacy, college enrollment, infant mortality, and infrastructure. Modern trends found under the monarchy, such as urbanization, growing enrollment in higher education and literacy, continued.