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Transportation sector is the major cause of air pollution in Iran and the share of this sector in urban air pollution in the cities of Iran especially Tehran is more than 80%. Historical background of the air pollution problem in Iran returns to 1971. During these four decades, in order to reduce fuel consumption and emission reduction from mobile sources, Iran have implemented different policies and plans some of which were successful while others haven’t had satisfactory results. In this article we have reviewed the trend of policy making for energy in transportation sector and the effects of policies and plans on fuel consumption and pollutants emissions in this sector have been analysed. Results showed that the very low price of fuels in Iran has caused wasteful use of fuels. Furthermore price reforms haven’t been able to decrease the amount of consumption significantly. However gasoline rationing policy only have decreased the growth rate of consumption in recent years.