Japan was an important and influential trade partner of Iran during the Pahlavi II era. However, no studies have been conducted on the effects of this country and its trade relations with Iran. The present study attempts to deal with the ups and downs in Japan’s trade relations with Iran during that era and evaluate its political impacts based on available documents. Furthermore, the discussions also include the types of cargo, their amount, their value and the dimensions of the trade between the two countries. According to the results of the study, the ideological affiliation of Iran and Japan to the Western bloc was effective in the development of trade relations between the two countries. Thus, Japan became the main importer of Iran’s oil and Iran employed Japanese experts for its economical and industrial activities. Therefore, several contracts were signed between the two nations. Nevertheless, the trade balance was in Japan's favor. The Iranian government’s efforts to balance the scales were successful in a few instances; however it failed in the long run. In conclusion, Japan became Iran’s third trade partner in this era.