Cultural diplomacy deals with creating an appropriate mentality in cultural addressees. To create an effective cultural diplomacy, we must first try to realize ourselves and manage to create an appropriate mentality in cultural diplomacy addressees. However, if this mentality is marred, promotion of cultural diplomacy will be definitely very difficult and challenging. Applying culture and utilizing cultural tools in diplomacy have certain advantages in comparison with the common tools and leverages in international relations. To that end, some of the most important advantages may be listed as minimum resistance in target communities and nations, lack of hostile tone in cultural diplomacy and instead manifesting attraction, serious involvement of unofficial players, non-governmental organizations as well as real and legal entities. Cultural diplomacy chiefly pursues exploration, explanation, and promotion of values, joint and universal interests, and then, meeting national interests within the framework of these values and joint interests. Cultural diplomacy can be designed and implemented in many fields more active, more flexible and even more opportunistic than traditional and classic diplomacy. In this connection, we can say cultural diplomacy infiltrates more easily in the social layers to help confidence-building among people and other countries. In this sense, it generates soft power. But these will be realized only when the country exporting culture is itself primarily endowed with required preconditions and possesses certain capacities in domestic level. This paper is an attempt to explain cultural diplomacy and analyze the indicators of Iranian cultural diplomacy. The Islamic Republic of Iran possesses very valuable capacities and capabilities in this connection, but it needs domestic capability and optimal use of cultural components to promote soft power parameters in Iranian diplomacy and finally boost national interests.