The history of Zahedan is a story of rapid growth in the 20th century. Unlike many ancient cities in Iran, Zahedan is a comparatively young administrative and commercial centre. Initially, a small village known as Dozdab was located here. Its modern history began in the early 20th century when the settlement started to gain strategic importance. In the 1930s, during the reign of Reza Shah Pahlavi, the city received its current name — Zahedan, which translates as the "City of Hermits" or the "City of the Pious".
A key factor in the establishment of Zahedan was its unique geographical location. The city is situated in the southeast of the country, in immediate proximity to the borders with Pakistan and Afghanistan, which transformed it into a vital hub for international trade and transit. Development was further facilitated by the construction of transport infrastructure, including a railway connecting it to the Pakistani network, and major highways. Granting it the status of the administrative centre of the Sistan and Baluchestan Province also played a decisive role in its growth and development.
From the very beginning, Zahedan formed as a multi-ethnic centre. The population is primarily composed of Baluchi people, but thanks to its trading status, the city attracted settlers from various parts of the country. The early economy was closely linked to trade, as well as traditional crafts such as carpet weaving, ceramics production, and embroidery. Agriculture in the arid climate was supported through the use of groundwater. These factors laid the foundation for Zahedan's modern appearance as an important economic and cultural centre of the region.