The history of the Jews in Iran dates back to late biblical times (mid-1st millennium BCE). The biblical books of Chronicles, Isaiah, Daniel, Ezra, Nehemiah, 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 event in Jewish history took place in the late 6th 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 the Assyrian king Shalmaneser V conquered the (Northern) Kingdom of Israel (722 BCE) and took some of the Israelites into captivity at Khuzestan. In 586 BCE, the Neo-Babylonian Empire 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 also the Armenian, Georgian, Iraqi, Bukharan, and the Mountain Jewish communities. 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.

Jews trace their heritage in Iran to the Babylonian captivity of the 6th century BCE and have retained their ethnic, linguistic, and religious identity. However, a Library of Congress country study on Iran states that "Over the centuries the Jews of Iran became physically, culturally, and linguistically indistinguishable from the non-Jewish population. The overwhelming majority of Jews speak Persian as their mother language, and a tiny minority, Kurdish."

According to the Bible, the Kingdom of Israel (or Northern Kingdom) was one of the successor states to the older United Monarchy (also called the Kingdom of Israel), which came into existence in about the 930s BCE after the northern Tribes of Israel rejected Solomon's son Rehoboam as their king. In c. 732 BCE, the Assyrian king, Tiglath-Pileser III sacked Damascus and Israel, annexing Aramea and Transjordan territory of the tribes of Reuben, Gad and Manasseh in Gilead including the desert outposts of Jetur, Naphish and Nodab. Israel continued to exist within the reduced territory as an independent kingdom subject to Assyria until around 725-720 BCE, when Assyria again invaded it, and the rest of the population was deported. From this time, no trace exists of the Kingdom of Israel and its population are commonly referred as Ten Lost Tribes. The Bible (2 Kings 18:11) reports that some of these ten lost tribes were expelled to the land of the Medes in modern-day Iran. The book of Tobit, which is part of the biblical Apocrypha, suggests that there were people from the tribe of Naphtali living in Rhages (Rey, Iran) and Ecbatana (Hamedan) at the time of the Assyrians (Book of Tobit 6:12).

Three times during the 6th century BCE, the Jews (Hebrews) of the ancient Kingdom of Judah were exiled to Babylon by Nebuchadnezzar. These three separate occasions are mentioned in Jeremiah (52:28–30). The first exile was in the time of Jehoiachin in 597 BCE, when the Temple of Jerusalem was partially despoiled and a number of the leading citizens exiled. After eleven years (in the reign of Zedekiah) a new Judean uprising took place; the city was razed to the ground, and a further exile ensued. Finally, five years later, Jeremiah records a third exile. After the overthrow of Babylonia by the Achaemenid Empire, Cyrus the Great allowed the Jews to return to their native land (537 BCE). According to the Hebrew Bible (See Jehoiakim; Ezra; Nehemiah and Jews) more than forty thousand are said to have availed themselves of the privilege, however this is not supported by modern scholarship. Lester Grabbe argues that the immigration would probably only have amounted to a trickle over decades, with the archaeological record showing no evidence of large scale increases in population at any time during the Persian period. Cyrus also allowed them to practice their religion freely (See Cyrus Cylinder) unlike the previous Assyrian and Babylonian rulers.

In the first year of Cyrus king of Persia, to fulfill the word of the Lord spoken by Jeremiah, the Lord moved the heart of Cyrus king of Persia to make a proclamation throughout his realm and also to put it in writing: "This is what Cyrus king of Persia says: 'The Lord, the God of heaven, has given me all the kingdoms of the earth and he has appointed me to build a temple for him at Jerusalem in Judah. Any of his people among you may go up to Jerusalem in Judah and build the temple of the Lord, the God of Israel, the God who is in Jerusalem, and may their God be with them. And in any locality where survivors may now be living, the people are to provide them with silver and gold, with goods and livestock, and with freewill offerings for the temple of God in Jerusalem.'" —Book of Ezra, 1:1–4

The Bible states that Cyrus ordered the rebuilding of the Second Temple in the same place as the first but died before it was completed. The historical nature of this has been challenged. Professor Lester L Grabbe argues that there was no decree but that there was a policy that allowed exiles to return to their homelands and rebuild their temples. He also argues that the archaeology suggests that the return was a "trickle", taking place over perhaps decades, resulting in a maximum population of perhaps 30,000. Philip R. Davies called the authenticity of the decree "dubious", citing Grabbe and adding that J. Briend argued against "the authenticity of Ezra 1.1–4 is J. Briend, in a paper given at the Institute Catholique de Paris on 15 December 1993, who denies that it resembles the form of an official document but reflects rather biblical prophetic idiom."