To mitigate climate change, low-carbon economy is introduced as a sustainable development strategy. Natural gas, as an alternative to pollutant fuels such as coal, which is now widely used, could facilitate global transition to the age of renewable energy. Iran is one of the major emitters of CO₂ in the world, and it is thus, crucial to move toward low-carbon economy in order to accomplish its commitment in reducing GHG emissions. This study evaluates Iran’s natural gas industry development by reviewing reserves, production and consumption, infrastructures as well as natural gas agreements. The total proven natural gas reserves of Iran is estimated 33500 bcm by the end of 2015, where more than 60% of them are offshore. There exists 23 active fields in Iran and the largest of which is South Pars gas reservoirs in the Persian Gulf. The gross production of natural gas was 257623 million cubic meters in 2015 of which 80% was marketed. The current state of Iran’s natural gas industry is assessed as an acceptable level due to massive reserves, high production capacity, wide transmission and distribution network and high penetration of natural gas in cities and villages. That is why natural gas has the highest contribution in the national energy mix, resulting in replacing petroleum fuels with natural gas to decrease CO₂ emissions. However, in recent years, delays in implementing development projects of the natural gas industry made supplying domestic demand difficult during cold seasons. Furthermore, it negatively influenced the nation’s gas export potential. Iran’s natural gas industry faces some challenges including growing domestic demand, high energy loses in residential and commercial sectors and low efficiency of energy systems in industrial and power generation sectors. If challenges are solved, natural gas could serve as a bridge for transition toward the low-carbon future of Iran.