The beginnings of Jewish history in Iran date back to late Biblical times. The biblical books of Isaiah, Daniel, Ezra, Nehemiah, Chronicles, and Esther contain references to the life and experiences of Jews in Persia. In the book of Ezra, the Persian kings are credited with permitting and enabling the Jews to return to Jerusalem and rebuild their Temple; its reconstruction was carried out "according to the decree of Cyrus, and Darius, and Artaxerxes king of Persia" (Ezra 6:14). This great event in Jewish history took place in the late sixth century BCE, by which time there was a well-established and influential Jewish community in Persia.

Persian Jews have lived in the territories of today’s Iran for over 2,700 years, since the first Jewish diaspora when Shalmaneser V conquered the (Northern) Kingdom of Israel (722 BCE) and sent the Israelites (the Ten Lost Tribes) into captivity at Khorasan. In 586 BCE, the Babylonians expelled large populations of Jews from Judea to the Babylonian captivity. Jews who migrated to ancient Persia mostly lived in their own communities.

The Persian Jewish communities include the ancient (and until the mid-20th century still extant) communities not only of Iran, but of parts of what is now Afghanistan, Azerbaijan, northwestern India, Kirgizstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

Some of the communities were isolated from other Jewish communities, to the extent that their classification as "Persian Jews" is a matter of linguistic or geographical convenience rather than actual historical relationship with one another. During the peak of the Persian Empire, Jews are thought to have comprised as much as 20% of the population.

Today the term Iranian Jews is mostly used to refer to Jews from the country of Iran. In various scholarly and historical texts, the term is used to refer to Jews who speak various Iranian languages. Iranian immigrants in Israel (nearly all of whom are Jewish) are referred to as Parsim (Hebrew: פרסים‎ meaning "Persians"). In Iran, Jews and Jewish people in general are referred to by four common terms: Kalimi, which is considered the most proper term; Yahudi or Pejmani, which is less formal but correct; Israel the term by which the Jews refer to themselves; and Jood or Johood, a term having negative connotations and considered by many Jews as offensive.