Abstarct: This thesis investigates the relationship between stock market development variables and economic growth in Iran by using quarterly data that covered the period between 1371:1 to 1389:4 (in Islamic solar calendar). The existence of a long-run relationship between stock market and economic growth is tested using Johansen’s cointegration test and determination of the existence of a causality relationship between the variables and its direction is baxsed on the Granger causality test. Additionally, the short-run relationship between the variables of the research is tested by using the vector error correction model (VECM). The analysis uses selected stock market development variables, namely, market capitalization ratio, value traded ratio, turnover ratio and concentration degree and the gross domestic product (GDP) has been used as the measure of economic development. The sationarity of the variables is tested using the Augmented Dickey-fuller (ADF) and Phillips-Perron (PP) tests, which showed that all of the variables are non-stationary in levels and become stationary after differencing. The results of the Johansen cointegration test shows that there is a long-run relationship between stock market development and economic growth in Iran. The Granger causality test results shows that there is a unilateral causality between stock market development and economic growth in Iran and the direction of this relationship is from economic growth to stock market development. This result indicates that economic growth leads to the generation of new demand for financial services, especially stock market. In other words, the existence of a demand following relationship in Iran has been verified.