Iran is subjected to heavy groundwater exploitation due to the increase in agricultural activities and domestic and industrial uses as well. Data from Gravity Recovery and Climate Experiment (GRACE) along with outputs of land surface model are utilized to estimate the mass variations over Iran and to investigate their responses to climatic variations. The results indicate that Iran received average annual precipitation rate of 291 mm year−1 during period I (April 2002–March 2007) and 234 mm year−1 during period II (April 2007–July 2016) after the onset of a drought in 2007; the study area received an average natural recharge of about 40.567 ± 7.923 mm year−1 during period I and 23.938 ± 7.483 mm year−1 during period II; higher recharge rate in period I is related to the increase in the observed rainfall rates; the area witnessed a high negative trend in the groundwater storage variation during period II, estimated at − 11.062 ± 1.109 mm year−1, compared with a positive trend, estimated at + 5.167 ± 3.556 mm year−1 of period I; the groundwater storage depletion in period II is not compensated for by the recharge rate from the low precipitation over the area, especially after the onset of the 2007 drought; however, the groundwater withdrawal in period I is compensated for by the recharge rate from the high precipitation over the area; and the reported higher rate of subsidence in northern Iran seems to be caused by the large groundwater withdrawal. These results show the capability of the GRACE in monitoring the regional groundwater storage variations over Iran.