Rural residents, living in some 60,000 villages scattered across the vast area of Iran, have traditionally been the most deprived segment of Iranian population in terms of income, education and health status. The past two decades have seen a marked decline in the share of rural areas of the population and some improvement in their living standards. Yet, the average income/expenditure of rural households remains at about two-thirds of the urban households and a much larger proportion of rural population, particularly women, than the urban are illiterate. Nevertheless, period since 1980 has been associated with a striking improvement in the health status of rural population and the traditional urban-rural gap in various areas of health has been markedly narrowed. This is generally attributed to the innovative, comprehensive, community-based and relatively cheap primary health care system established since early 1980s. The aim of this paper is to present latest data on the narrowing gap between urban and rural areas of Iran in terms of a variety of health indicators. The results indicate how government investment in a low-cost, culturally acceptable and locally supported primary health care system can effectively change the health status of rural population and thus contribute to rural poverty alleviation programs.