Iranian livestock diversity is still largely unexplored, in spite of the interest in the populations historically reared in this country located near the Fertile Crescent, a major livestock domestication centre. In this investigation, the genetic diversity and differentiation of 10 Iranian indigenous fat-tailed sheep breeds were investigated using 18 microsatellite markers. Iranian breeds were found to host a high level of diversity. This conclusion is substantiated by the large number of alleles observed across loci (average 13.83, range 7-22) and by the high within-breed expected heterozygosity (average 0.75, range 0.72-0.76). Iranian sheep have a low level of genetic differentiation, as indicated by the analysis of molecular variance, which allocated a very small proportion (1.67%) of total variation to the between-population component, and by the small fixation index (FST = 0.02). Both Bayesian clustering and principal coordinates analysis revealed the absence of a detectable genetic structure. Also, no isolation by distance was observed through comparison of genetic and geographical distances. In spite of high within-breed variation, signatures of inbreeding were detected by the FIS indices, which were positive in all and statistically significant in three breeds. Possible factors explaining the patterns observed, such as considerable gene flow and inbreeding probably due to anthropogenic activities in the light of population management and conservation programmes, are discussed