This project deals with the relationship between the two states Israel and Iran. I am interested to investigate the reasons for the present hostility between the two states and how this hostility developed since the founding of the states Israel. In order to answer this question, I will use the theoretical framework of Neo-realism from Kenneth N. Waltz. His theories focus on the actions of states in the international environment. His core assumption is that states are rational actors which need to survive in an anarchic environment. My findings show, that the root for the present tension is due to the Iranian Revolution and the change in the governments perception. The old regime under the Shah was western oriented and maintained good relationships with Israel. Before the revolution, both states benefited from this co-operation. However, the Iranian Revolution changed this relationship. In addition, the present tensions are mainly a result of the security dilemma and the anarchy in which Iran as per my findings sees itself. In my Analysis I will present some examples which are contradiction to the theoretical aspects of Waltz. However his theory is still “good enough” to be used in order to understand the history of their relationship and the present tensions between these two states.