On 19 August, in the southwestern city of Abadan, four arsonists barred the door of the Cinema Rex movie theatre and set it on fire. In what was the largest terrorist attack in history prior to the 11 September 2001 attacks, 422 people inside the theatre were burned to death. Khomeini immediately blamed the Shah and SAVAK for setting the fire. Due to the pervasive revolutionary atmosphere, the public also blamed the Shah for starting the fire, despite the government's insistence that they were uninvolved.
The chain of events began with the death of Mostafa Khomeini, chief aide and eldest son of Ruhollah Khomeini. He mysteriously died at midnight on 23 October 1977 in Najaf, Iraq. SAVAK and Iraqi government declared heart attack as the cause of death, though many believed his death was attributed to SAVAK. Khomeini remained silent after the incident, but in Iran with the spread of the news there was a wave of protest in several cities and mourning ceremonies in major cities were held.
On 7 January 1978, an article ("Iran and Red and Black Colonization") appeared in the national daily Ettela'at newspaper. Written under a pseudonym by a government agent, it denounced Khomeini as a "British agent" and a "mad Indian poet" conspiring to sell out Iran to neo-colonialists and communists. Upon the publishing of the article, religious seminary students in the city of Qom, angered over the insult to Khomeini, clashed with police. According to the government, two were killed in the clash; according to the opposition, seventy were killed and over five hundred were injured. However, the casualty figures are different in different sources.
According to the Shi'ite customs, memorial services (referred to as chehelom) are held forty days after a person's death. Encouraged by Khomeini (who declared that the blood of martyrs must water the "tree of Islam"), radicals pressured the mosques and moderate clergy to commemorate the deaths of the students, and used the occasion to generate protests. The informal network of mosques and bazaars, which for years had been used to carry out religious events, increasingly became consolidated as a coordinated protest organization. On 18 February, forty days after Qom clashes, demonstrations broke out in various different cities. The largest was in Tabriz, which descended into a full-scale riot. "Western" and government symbols such as cinemas, bars, state-owned banks, and police stations were set ablaze. Units of Imperial Iranian Army were deployed to the city to restore order, and the death toll, according to government was six, while Khomeini claimed hundreds were "martyred".
A series of escalating protests broke out in major cities, and deadly riots broke out in Isfahan where protesters fought for the release of Ayatollah Jalaluddin Taheri. Martial law was declared in the city on 11 August as symbols of Western culture and government buildings were burned, and a bus full of American workers was bombed. Due to his failure to stop the protests, Prime Minister Amuzegar offered his resignation.
The Shah increasingly felt that he was losing control of the situation and hoped to regain it through complete appeasement. He decided to appoint Jafar Sharif-Emami to the post of prime minister, himself a veteran prime minister. Emami was chosen due to his family ties to the clergy, but he had a reputation of corruption during his previous premiership. Under the Shah's guidance, Sharif-Emami effectively began a policy of "appeasing the opposition's demands before they even made them".
4 September was Eid-e-Fitr, the holiday celebrating the end of the month of Ramadan. A permit for an open air prayer was granted, in which 200,000–500,000 people attended. Instead, the clergy directed the crowd on a large march through the center of Tehran (the Shah reportedly watched the march from his helicopter, unnerved and confused). A few days later even larger protests took place, and for the first time protesters called for Khomeini's return and the establishment of an Islamic republic.
At midnight on 8 September, the Shah declared martial law in Tehran and 11 other major cities throughout the country. All street demonstrations were banned, and a night-time curfew was established. Tehran's martial law commander was General Gholam-Ali Oveissi, who was known for his severity against opponents.
On 9 September, 700 workers at Tehran's main oil refinery went on strike, and on 11 September the same occurred at refineries in five other cities.
On 13 September, central government workers in Tehran simultaneously went on strike.
By late October, a nationwide general strike was declared, with workers in virtually all major industries walking off their jobs, most damagingly in the oil industry and the print media. Special "strike committees" were set up throughout major industries to organize and coordinate the activities. The Shah did not attempt to crack down on strikers, but instead gave them generous wage increases.
In November, secular National Front leader Karim Sanjabi flew to Paris to meet Khomeini. There the two signed an agreement for a draft constitution that would be "Islamic and democratic". It signaled the now official alliance between the clergy and the secular opposition.In order to help create a democratic facade, Khomeini placed Westernized figures (such as Sadegh Qotbzadeh and Ebrahim Yazdi) as the public spokesmen of the opposition, and never spoke to the media of his intentions to create a theocracy.
On 5 November, demonstrations at University of Tehran became deadly after a fight broke out with armed soldiers. Within hours, Tehran broke out into a full-scale riot. Block after block of Western symbols such as movie theaters and department stores, as well as government and police buildings, were seized, looted, and burned. The British embassy in Tehran was partially burned and vandalized as well, and the American embassy nearly suffered the same fate (the event became known to foreign observers as "The Day Tehran Burned").
On 6 November, the Shah dismissed Sharif-Emami from the post of prime minister, and chose to appoint a military government in its place. The Shah chose General Gholam-Reza Azhari to be prime minister because of his mild-mannered approach to the situation. The cabinet he would choose was a military cabinet in name only and consisted primarily of civilian leaders.
On 2 December 1978, the Muharram protests began. Named for the Islamic month they began in, the Muharram protests were impressively huge and pivotal. Over two million protesters (many of whom were teenagers organized by the mullahs from the mosques of southern Tehran) took to the streets, crowding Shahyad Square. Protesters frequently went out at night, defying the set curfew, often taking to rooftops and shouting "Allahu-Akbar" (God is Great). According to one witness, many of the clashes on the street had an air of playfulness rather than seriousness, with security forces using "kid gloves" against the opposition (nevertheless, the government reported at least 12 opposition deaths).
As the days of Tasu'a and Ashura (10 and 11 December) approached, in order to prevent a deadly showdown the Shah began to draw back. In negotiations with Ayatollah Shariatmadari, the Shah ordered the release of 120 political prisoners and Karim Sanjabi, and on 8 December revoked the ban on street demonstrations. Permits were issued for the marchers, and troops were removed from the procession's path. In turn, Shariatmadari pledged that to make sure that there would be no violence during the demonstrations.On 10 and 11 December, the days of Tasu'a and Ashura, between six and nine million anti-shah demonstrators marched throughout Iran.
On 11 December, a dozen officers were shot dead by their own troops at Tehran's Lavizan barracks. Fearing further mutinies, many soldiers were returned to their barracks.Mashhad (the second largest city in Iran) was abandoned to the protesters, and in many provincial towns demonstrators were effectively in control.
The Shah began to search for a new prime minister, one who was a civilian and a member of the opposition. On 28 December, he secured an agreement with another major National Front figure, Shahpour Bakhtiar. Bakhtiar would be appointed prime minister (a return to civilian rule), while the Shah and his family would leave the country for a "vacation". His royal duties would be carried out by a Regency Council, and three months after his departure a referendum would be submitted to the people deciding on whether Iran would remain a monarchy or become a republic. A former opponent of the Shah, Bakhtiar became motivated to join the government because he was increasingly aware of Khomeini's intentions to implement hard-line religious rule rather than a democracy. Karim Sanjabi immediately expelled Bakhtiar from the National Front, and Bakhtiar was denounced by Khomeini (who declared that acceptance of his government was the equivalent of "obedience to false gods").
On the morning of 16 January 1979, Bakhtiar was officially appointed prime minister. The same day, a tearful Shah and his family left Iran for exile in Egypt, never to return.
Bakhtiar invited Khomeini back to Iran, with the intention of creating a Vatican-like state in the holy city of Qom, declaring that "We will soon have the honor of welcoming home the Ayatollah Khomeini". On 1 February 1979 Khomeini returned to Tehran in a chartered Air France Boeing 747. The welcoming crowd of several million Iranians was so large he was forced to take a helicopter after the car taking him from the airport was overwhelmed by an enthusiastic welcoming crowd.
On the day of his arrival Khomeini made clear his rejection of Bakhtiar's government in a speech promising, "I shall kick their teeth in. I appoint the government, I appoint the government in support of this nation". On 5 February at Khomeini's headquarters in the Refah School in southern Tehran, he declared a provisional revolutionary government, appointed opposition leader Mehdi Bazargan (from the religious-nationalist Freedom Movement, affiliated with the National Front) as his own prime minister, and commanded Iranians to obey Bazargan as a religious duty.
On 9 February, a rebellion of pro-Khomeini air force technicians broke out at the Doshan Tappeh Air Base. A unit of the pro-Shah Immortal Guards attempted to apprehend the rebels, and an armed battle broke out. Soon large crowds took to the streets, building barricades and supporting the rebels, while Islamic-Marxist guerillas with their weapons joined in support.
The final collapse of the provisional non-Islamist government came at 2 pm 11 February when the Supreme Military Council declared itself "neutral in the current political disputes... in order to prevent further disorder and bloodshed." All military personnel were ordered back to their bases, effectively yielding control of the entire country to Khomeini. Revolutionaries took over government buildings, TV and radio stations, and palaces of the Pahlavi dynasty, marking the end of the monarchy in Iran. Bakhtiar escaped the palace under a hail of bullets, fleeing Iran in disguise.
On 30 and 31 March (Farvardin 10, 11) a referendum was held over whether to replace the monarchy with an "Islamic republic". Khomeini called for a massive turnout and only the National Democratic Front, Fadayan, and several Kurdish parties opposed the vote. The results showed that 98.2% had voted in favor of the Islamic Republic.
The Revolutionary Guard, or Pasdaran-e Enqelab, was established by Khomeini on 5 May 1979, as a counterweight both to the armed groups of the left, and to the Shah's military. The guard eventually grew into "a full-scale" military force,becoming "the strongest institution of the revolution."
On 4 November 1979 youthful Islamists, calling themselves Muslim Student Followers of the Imam's Line, invaded the US embassy compound in Tehran and seized its staff. Revolutionaries were angry because of how the Shah had fled abroad while the Embassy-based American CIA and British intelligence organized a coup d'état to overthrow his nationalist opponent who was a legitimately elected official. The students held 52 American diplomats hostage for 444 days, which played a role in helping to pass the constitution, suppressing moderates, and otherwise radicalising the revolution.
The provisional government fell shortly after American Embassy officials were taken hostage on 4 November 1979. Bazargan's resignation was received by Khomeini without complaint, saying "Mr. Bazargan ... was a little tired and preferred to stay on the sidelines for a while." Khomeini later described his appointment of Bazargan as a "mistake."
The hostage crisis ended with the signing of the Algiers Accords in Algeria on 19 January 1981. The hostages were formally released to United States custody the following day, just minutes after Ronald Reagan was sworn in as the new American president.