According to me, Iran and Israels current relations are a result of the earlier support of US and Israel for the Pahalvi dynasty. Till then the Iranians never had a problem with Israel and they also had people to people contact and there still is a considerable Jewish population in Iran. From the establishment of the State of Israel in 1948 until the Iranian Revolution and the fall of the Pahlavi dynasty in 1979, Israel and Iran maintained close ties. Iran was the second Muslim-majority country to recognize Israel as a sovereign nation after Turkey. Israel viewed Iran as a natural ally as a non-Arab power on the edge of the Arab world, in accordance with David Ben Gurion's concept of an alliance of the periphery. Israel had a permanent delegation in Tehran which served as an unofficial de facto embassy. After the Six Day War, Iran supplied Israel with a significant portion of its oil needs and Iranian oil was shipped to European markets via the joint Israeli-Iranian Eilat-Ashkelon pipeline. Brisk trade between the countries continued until 1979. Israeli construction firms and engineers were active in Iran. Iranian-Israeli military links and projects were kept secret, but they are believed to have been wide-ranging, for example the joint military project Project Flower (1977-79), an Iranian-Israeli attempt to develop a new missile. In spite of all those ties and trades, Iran voted in support of the UN General Assembly Resolution 3379 in 1975 which equated Zionism with racism (the resolution, however, was later revoked with Resolution 4686 in 1991, which post-revolution Iran voted against). During Ayatollah Khomeini's campaign to overthrow Shah Mohammad Reza Pahlavi, Israel, which had relatively warm relations with the Shah, became an issue. Khomeini declared Israel an "enemy of Islam" and 'The Little Satan' - the United States was called 'The Great Satan'. Debate still runs as to whether Khomeini called out: â€œIsrael must be wiped off the mapâ€ indicating military action and destruction, or: â€œthis regime occupying Jerusalem should vanish from the pages of timeâ€ indicating a hope or wish (see Mahmoud Ahmadinejad and Israel#"Wiped off the map" or "Vanish from the pages of time" translation). After the second phase of the 1979 Iranian Revolution which witnessed the establishment of the Islamic Republic, Iran cut off all official relations; official statements, state institutes, events and sanctioned initiatives adopted a sharp anti-Zionist stance. According to Dr. Trita Parsi, author of "Treacherous Alliance - The Secret Dealings of Israel, Iran and the United States," (Yale University Press, 2007), Iran's strategic imperatives compelled the Khomeini government to maintain clandestine ties to Israel, while hope that the periphery doctrine could be resurrected motivated the Jewish State's assistance to Iran. Ayatollah Ali Khamenei in December 2000 called Israel a "cancerous tumor" that should be removed from the region. In 2005 he emphasized that â€œPalestine belongs to Palestinians, and the fate of Palestine should also be determined by the Palestinian peopleâ€. Also in 2005 Khamenei responded to President Ahmadinejad's alleged remark that Israel should be "wiped off the map" by saying that "the Islamic Republic has never threatened and will never threaten any country." Under reformist Iranian President Mohammad Khatami, elected in 1997, some believed Iranâ€“Israel relations would improve. Khatami called Israel an "illegal state" and a "parasite," but also said in 1999 Jews would be "safe in Iran" and all religious minorities would be protected. A report indicates that Iran tried in 2003 to initiate a rapprochement with Israel by recognizing its existence in a proposal to the United States. The report claims that Iran's peace proposal with Israel was not accepted by the United States. In January 2004, Khatami spoke to an Israeli reporter who asked him on what grounds Iran would recognize Israel. This was believed to be the first time he had spoken publicly with an Israeli. At the funeral of Pope John Paul II in April 2005, Khatami was seated close to the Iranian-born Israeli President Moshe Katsav, who is from the same province, the Yazd Province, as Khatami. Katsav said that he shook Khatami's hand and the two had a brief conversation about Iran. However, Khatami denied this President Mahmoud Ahmadinejad, in office since August 2005, at the October 2005 "World Without Zionism" conference in Teheran adopted a sharp anti-Zionist stance. On December 8, 2005, during a summit of Muslim nations in Islam's holy city of Mecca, Ahmadinejad told Iran's Arabic channel Al-Alam a complicated story on Holocaust and the establishment of Israel. Since then, he regularly makes statements pertaining to these topics. Israeli support for Iran during the Iranâ€“Iraq war According to Ronen Bergman, Israel sold Iran US$75 million worth of arms from stocks of Israel Military Industries, Israel Aircraft Industries and Israel Defense Force stockpiles, in their Operation Seashell in 1981. Materiel included 150 M-40 antitank guns with 24,000 shells for each gun, spare parts for tank and aircraft engines, 106 mm, 130 mm, 203 mm and 175 mm shells and TOW missiles. This materiel was transported first by air by Argentine airline Transporte AÃ©reo Rioplatense and then by ship. According Trita Parsi, Israeli support for Iran consisted of several elements: Arms sales to Iran that totaled an estimated $500 million from 1980 to 1983 according to the Jaffee Institute for Strategic Studies at Tel Aviv University. Most of it was paid for by Iranian oil delivered to Israel. "According to Ahmad Haidari, "an Iranian arms dealer working for the Khomeini regime, roughly 80% of the weaponry bought by Tehran" immediately after the onset of the war originated in Israel. Arms shipments from the U.S. to Iran in the Iran-Contra Affair facilitated by Israel. Israel's June 7, 1981 attack on Iraq's Osirak nuclear reactor which set back Iraq's nuclear program. The reactor was thought to be producing material for nuclear bomb which Iraq was likely to first use against Iran. Israel is also reported to have supplied instructors and non-armaments help to Iran for the war effort. According to Mark Phythian, the fact "that the Iranian air force could function at all" after Iraq's initial attack and "was able to undertake a number of sorties over Baghdad and strike at strategic installations" was "at least partly due to the decision of the Reagan administration to allow Israel to channel arms of US origin to Iran to prevent an easy and early Iraqi victory." According to John Bulloch and Harvey Morris, the Israelis devised and manufactured the huge, lightweight polystyrene blocks which the Iranian assault forces carried with them to build instant makeshift causeways across the shallow Iraqi water defences in front of Basra; Israel kept Iranian planes flying in spite of a lack of spares; and Israeli instructors taught Iranian commanders how to handle troops. Despite all the speeches of Iranian leaders and the denunciation of Israel at Friday prayers, there were never less than about a 100 Israeli advisers and technicians in Iran at any time throughout the war, living in a carefully guarded and secluded camp just north of Tehran; they remained there even after the ceasefire Source Wiki.