Iran has become the first country in the world to provide a de facto basic income to all its citizens. This article reviews the development of the main component of Iran’s economic reform plan – the replacement of fuel and food subsidies with direct cash transfers to the population – and shows how a system of universal, regular and unconditional cash transfers emerged almost by default as a by-product of an attempt to transform an inefficient and unfair system of price subsidies. The main features of the cash subsidy system are compared with those of a basic income; then some lessons from this experience are drawn that may enhance the prospects of basic income as a realistic proposition.