On 18 June, Iraq launched Operation Forty Stars in conjunction to the Mujahideen-e-Khalq (MEK) around Mehran. With 530 aircraft sorties and heavy use of nerve gas, they crushed the Iranian forces in the area, killing 3,500 and nearly destroying a Revolutionary Guard division. Mehran was captured once again and occupied by the MEK. Iraq also launched air raids on Iranian population centers and economic targets, setting 10 oil installations on fire.
the USS Vincennes shot down Iran Air Flight 655, killing 290 passengers and crew. The lack of international sympathy disturbed the Iranian leadership, and they came to the conclusion that the United States was on the verge of waging a full-scale war against them, and that Iraq was on the verge of unleashing its entire chemical arsenal upon their cities.
By 12 July, the Iraqis had captured the city of Dehloran, 30 km (19 mi) inside Iran, along with 2,500 troops and much armour and material, which took four days to transport to Iraq. The Iraqis withdrew from Dehloran soon after, claiming that they had "no desire to conquer Iranian territory."
At this point, elements of the Iranian leadership, led by Rafsanjani (who had initially pushed for the extension of the war), persuaded Khomeini to accept the ceasefire. On 20 July 1988, Iran accepted Resolution 598, showing its willingness to accept a ceasefire.
On 26 July 1988, the MEK started their campaign in central Iran, Operation Forough Javidan (Eternal Light), with the support of the Iraqi army. The Iranians had withdrawn their remaining soldiers to Khuzestan in fear of a new Iraqi invasion attempt, allowing the Mujahedeen to advance rapidly towards Kermanshah, seizing Qasr-e Shirin, Sarpol-e Zahab, Kerend-e Gharb, and Islamabad-e-Gharb. The MEK expected the Iranian population to rise up and support their advance; the uprising never materialised but they reached 145 km (90 mi) deep into Iran.
Operation Mersad was the last big military operation of the war. Both Iran and Iraq had accepted Resolution 598, but despite the ceasefire, after seeing Iraqi victories in the previous months, Mujahadeen-e-Khalq (MEK) decided to launch an attack of its own and wished to advance all the way to Teheran.