Agha Mohammad had been proclaimed Shah in 1787 at the conclusion of a successful campaign against Russia; thereafter he established his capital in Tehran, where it has since remained. Later he recaptured Khorassan, though only after perpetrating the most horrible atrocities upon the person of Shahrokh.Most brutal and hated of all Iranian monarchs, Agha Mohammad at least succeeded in bringing the period of anarchy to an end; he fought successful campaigns against external enemies, and reconstituted the Shiite faith as the state religion. He was murdered in camp by his personal attendants in 1797.
Under his successors Fath Ali Shah ( 1798- 1834), Mohammad Shah (1834-48), Nasser od-Din Shah (1848-96), Muzaffar od-Din Shah (1896-1907), Mohammad Ali Shah (1907-09) and Ahmad Shah (1909-25), the whole context of Iranian history changes; we emerge from the Middle Ages into recent times, in which the interest of Iran lay not in her own civilization or splendor or mystery, but in her possibilities as a field for expansion among rival great powers - or rather, to be more precise, as a field in which expansion of one great power should be limited by a rival power; and it was precisely this rivalry, rather than any inherent strength in the Qajar monarchy, which together with a nation-wide resistance enabled Iran to preserve her endangered independence.
This long period saw Iran steadily lose territory to neighboring countries and fall under the increasing pressure of European nations, particularly Czarist Russia and the Great Britain. Under Path Ali Shah (1797- 1834) Persian c) aims in the entire Caucasian area (present republics of Azarbaijan, Caucasus, Armenia, and Daghestan) were challenged by the Russians in a long struggle that ended with the Treaty of Gulistan (1813) and the Treaty of Turkamanchai (1828), by which Iran was forced to give up the above Caucasian lands.

Herat, the rice valley on the Hari Rud, which had been part of the ancient Persian Empire, was taken by the Afghans. A series of campaigns to reclaim it ended with the intervention of the British on behalf of Afghanistan and resulted in the recognition of Afghan independence by Iran in 1857. The discovery of oil in early 1900s intensified the rivalry of Great Britain and Russia for power over the nation. Internally, the early 20th century saw the rise of the constitutional movement and a Constitution establishing a Parliament (Majlis) was accepted by Muzaffar od-Din Shah ( 1853-1907), in 1906. He was a weak ruler who borrowed money from Russia and failed to oppose the encroachments of Russia and Great Britain on Persian sovereignty. Much disaffection arose among the people. After the revolutionary outburst of 1906, he was force  to agree to the convocation of a national assembly. He died soon after signing the long-awaited constitution. Meanwhile, the British- Russian rivalry continued and in 1907 resulted in an Anglo-Russian agreement (annulled after World War I) that divided Iran into spheres of influence.
The period preceding World War I was one of political and financial difficulty. In 1911, Morgan Shuster, an American financier, was engaged as financial adviser and treasurer general of Iran. Some reforms were made, but conflicts with the Russians led to the failure and termination of the mission in 1920. During the war Iran was occupied by the British and the Russians but remained neutral. After the war Iran was admitted to the League of Nations as an original member. In 1919, Iran made a trade agreement with Great Britain in which Britain formally re-affirmed Iran's independence but actually attempted to establish a complete protectorate over it. After Iranian recognition of the (former) Soviet Union in a treaty of 1921, the latter renounced Czarist imperialistic policies toward Iran, canceled all debts and concessions, and withdrew occupation forces from Iranian territory.