The popular revolution in Iran has been one of the most publicized yet least well understood events in world politics. This booklet was developed to contribute to the understanding of the complexities of the situation in relation to Iran's future and U.S.--Iranian relations. The booklet contains three parts that include: (1) the revolution; (2) the question of succession; and (3) U.S. policy options. The revolution had widespread support due to countrywide opposition to the royal regime. The liberal leaders of the revolution accepted the charismatic Ayatollah Ruhollah Khomeini because of the powerful appeal of his personality. The revolution quickly polarized between the liberal reformists and the revolutionary religious elite. With the passing of Khomeini from the political scene, the dedication to achieving a consensus government based on Islamic ideology will subside. A struggle for leadership will occur, and a major effort will be made by the victors to achieve strong central control of the government and its institutions. Iran is militarily significant to the United States in containing the southward expansion of the Soviet Union. But the vicissitudes of U.S. policy toward Iran suggest that there has been no crystallization of a conclusion as to whether the Islamic Republican regime is a greater liability than an asset. A glossary of names and terms is provided. (SM)