In this paper we discussed socioeconomic inequality among ethnic communities in Iran. There were significant clues to the widening gap between Persian and non-Persian communities. That is, contrary to the existing theories, modernization and industrialization have not been accompanied with improvement in the distribution of the resources among ethnic communities; rather they have increased inequality. Thus, we looked into the particular nature of Iranian modernization for causes of interethnic inequality. Political centralization, domination of Persian language and culture, and centralization of early industrialization contributed much to the development of the interethnic inequality at early stage of the Iranian modernization. In the new area, the 1960s–1970s, the existing gap was further widened by centralized and urban-biased economic growth. This was possible only because of the government's unique access to the increasing oil revenues which were generated with very little help from the domestic means of production.