The history of Iran-Germany relations dates back to the Qajar era, however, it was during the First World War that Germany managed to expand its influence in the country to the extent that it bore upon Iran’s destiny during the two World Wars. Despite Iran’s declaration of neutrality in the Second World War, the Allied forces occupied the country under the pretext of German presence in Iran. The current article draws upon archived documents and employs descriptive-analytical method to find answers to the question as to how Iran-Germany relations constituted a pretext for the Allies under which they occupied the country and dragged Iran into the War? The research findings suggest that the Shah’s approval of Germany and the political elite and Iranians’ favorable opinion of them in hopes of using Germany as a counterweight to balance out the influence of Britain and Russia contributed to the growth of bilateral relations. The relations grew so strong that on the eve of World War II numerous Germans resided in Iran, which was the reason the Allies invaded and engaged Iran in a War that not only precipitated the transition of political power, but also had severe economic consequences.