The growing increase in the number of small towns, brought about as a result of Iran’s demographic changes in recent decades, has necessitated due consideration of these towns in the country’s hierarchical urban system on the one hand and their economic function in their immediate periphery on the other. In the present article, an analysis has been conducted of the economic role Zahedshahr has played as a small town in its rural periphery by using the Jacqueline Beaujeu Garnier and George Shapou’s Model, as well as the Locational Coefficient and the Abscissa-Ordinate Graphic Models. Results obtained from the analysis showed that the above town, in spite of its small size, has played an effective role in providing services to the inhabitants of its surrounding areas, as well as acting as a center for sale of surplus agricultural products, thanks to its relatively equipped administrative, educational, commercial, etc., centers. The findings of this research also showed the development of Zahedshahr to be directly dependent on the social and economic conditions of its periphery, so that rural population and agricultural products stability can influence such development.