The devastating effects of fossil fuels on the environment, limited natural sources and increasing demand for energy across the world make renewable energy (RE) sources more important than in the past. COP21 resulted in a global agreement on net zero CO2 emissions shortly after the middle of the 21st century, which will lead to a collapse of fossil fuel demand. To be more precise, whenever the costs of renewable resources decrease, the interest in using them increases. Therefore, suppliers and decision-makers have recently been motivated to invest in RE rather than fossil fuels technologies even though large untapped fossil fuel resources are available. Among RE technologies, Iran has a very high potential for solar energy, followed by wind, and complemented by hydropower, geothermal energy, biomass and waste-to-energy. The focus of the study is to define a cost optimal 100% RE system in Iran using an hourly resolution model. The optimal sets of RE technologies, least cost energy supply, mix of capacities and operation modes were calculated and the role of storage technologies was examined. Two scenarios have been evaluated in this study: a country-wide scenario and an integrated scenario. In the country-wide scenario, RE generation and energy storage technologies cover the country’s power sector electricity demand, however, in the integrated scenario, the RE generated was able to fulfil not only the electricity demand of the power sector but also the substantial demand for electricity for water desalination and synthesis of industrial gas. By adding the sector integration, the total levelized cost of electricity decreased from 45.3 €/MWh to 40.3 €/MWh. The LCOE of 40.3 €/MWh in the integrated scenario is quite cost-effective and beneficial in comparison to other low-carbon but high cost alternatives such as CCS and nuclear energy. The levelized cost of water and the levelized cost of gas are 1.5 €/m3 and 107.8 €/MWhLHV, respectively. A 100% renewable energy system for Iran is found to be a real policy option.