The signing of a $400 billion 25-year strategic and economic deal between Iran and China in March 2021 is the latest sign of the two countries’ resolve to work together more closely. As a counterbalance to the US and its allies in the Middle East (ME), this bilateral deal is expected to reduce the US influence in the ME. In this context, this paper focuses on China’s strategic objectives behind the deal and explores Iran’s procures from this deal. Further, the paper also analyses the nature of regional implications incurred by the bilateral arrangement. The study underlines that by strengthening strategic connections with Iran, China will have an unaffected and uninterrupted oil supplies from the Persian Gulf. Apart from the energy supplies, the recent deal offers China a relative strategic advantage in Middle East. Owing to the mounting influence of China through its extensive investments in the Middle East, the paper examines the region as a new front for Beijing to challenge the American supremacy—this time through Iran. Unlike the US, China has taken a development-oriented approach to the region, leveraging Iran’s regional power to expand economic ties with neighboring countries through what it refers to as the developmental peace, rather than the Western concept of democratic peace. On the other hand, through this strategic and economic accord, Iran has found it more profitable to pursue an eastward policy for economic and strategic dividends. Likewise, India is cautious of Beijing’s two-pronged embrace, with its shrinking cooperation with Iran, notably at the Chabahar, and its recent battle with China in the Himalayas. Given that, this paper not only examines the economic and strategic gains associated with the strategic partnership but also explores its implications over the US footprints in the Middle East and South Asian regions.