This study attempts to explore demand-based market potential and to identify the present strategies of handicrafts development in Iran. The discussion begins with an analysis of the characteristics of some specific handicrafts and continues to explore the proper marketing strategies which can best respond to the market requirements. In this paper, handicrafts represent the culture, tradition, and heritage of a country. Generally artistic and/or traditional in nature, they may be defined as goods produced either manually or with the help of simple tools. Such products can be utilitarian, aesthetic, artistic, creative, decorative, functional, traditional, and even religiously and socially symbolic and significant. In terms of economic development, handicrafts provide abundant opportunities for employment with low capital investment and can become a noticeable medium for foreign earnings. As an artisanal undertaking, handicrafts constitute one of the oldest traditional business markets in Iran. This sector is a principle source of livelihood of many people throughout the country. While the government is planning to expand its tourism industry, much potential exists for handicrafts to contribute substantially to national economy through employment generation and export earnings. The government is promoting well-mannered work through three broad themes: organization and representation; improved productivity and market access (both domestic and international); and reduced susceptibilities by understanding buyer's expectations. The study asserts that this sector in Iran lacks an appropriate marketing plan in order to place the right crafts in the right markets. Based on qualitative analyses of material derived from related literature and fieldwork reports, the paper concludes with a number of strategies which can contribute to the further development of handicrafts in Iran.