President Mamoud Ahmadinejad leads a country of more than seventy million people with huge strategic importance in the Middle East.
The relationship between Iran and America will be a high priority for Barack Obama after his inauguration in January.
The thorniest point of disagreement is Iran's nuclear programme, with the West objecting to the potential military use of the country's enrichment of uranium. The UN has imposed three sets of sanctions and the US under George Bush and Israel have refused to rule out military action.
Britain and America have also accused Iran of arming Shiite militias in Southern Iraq.
In March 2007, Iran claimed that fifteen Royal Navy sailors entered Iranian territorial waters, which Britain denied. The sailors were arrested and detained for almost two weeks before President Ahmadinejad released them in what he said was a "gift" to Britain.
Ahmadinejad has repeatedly used anti-Israeli rhetoric and has questioned the numbers of Jews killed in the Holocaust.
This month, the UN called on Iran to improve its human rights record - by abolishing torture and public executions, including stonings, and ending discrimination against women and religious and ethnic minorities.
President-elect Obama has in the past advocated talking unconditionally to Iran but has since taken a harder line, saying that Iran’s development of a nuclear weapon is unacceptable and condemning Iran for supporting terrorist organisations.
But Ahmadinejad himself has congratulated Obama on becoming president – the first time an Iranian leader has done so in three decades.
