AbstractIn April 2024, Iran launched its first‐ever military strikes on Israeli soil. While the United States and its allies see Tehran as potentially stoking the Gaza war and spreading the conflict across the region, the Islamic Republic has actually drawn its neighbors closer and enjoys friendlier relations with them today than at nearly any point in its 45‐year history. This rapprochement had been pursued informally by successive Iranian administrations since the late 1980s. However, it was formally adopted as the “good‐neighbor policy” by President Ebrahim Raisi, who served from 2021 until his death in a May 2024 helicopter crash. Raisi's successor, Masoud Pezeshkian, has both the desire to continue the policy and a favorable regional environment within which to do so. Despite serious challenges, Iran has improved engagement with longtime rivals like Saudi Arabia, Bahrain, and the UAE. Even cross‐border clashes with the Taliban in Afghanistan have been downplayed in favor of dialogue. Neighborly policies are impermanent. A number of structural and political obstacles could change Iran's calculations, but the approach is likely to continue for the foreseeable future.