The publication of The Satanic Verses in September 1988 caused immediate controversy in the Islamic world because of what was perceived as an irreverent depiction of the prophet Muhammad. The title refers to a Muslim tradition that is related in the book. According to it, Muhammad (Mahound in the book) added verses (sura) to the Qur'an accepting three goddesses that used to be worshipped in Mecca as divine beings. According to the legend, Muhammad later revoked the verses, saying the devil tempted him to utter these lines to appease the Meccans (hence the Satanic verses). However, the narrator reveals to the reader that these disputed verses were actually from the mouth of the Archangel Gibreel. The book was banned in many countries with large Muslim communities.

On 14 February 1989, a fatwa requiring Rushdie's execution was proclaimed on Radio Tehran by Ayatollah Ruhollah Khomeini, the spiritual leader of Iran at the time, calling the book "blasphemous against Islam." A bounty was offered for the death of Rushdie, who was thus forced to live under police protection for years to come. On 7 March 1989, the United Kingdom and Iran broke diplomatic relations over the Rushdie controversy.

The publication of the book and the fatwa sparked violence around the world, with bookstores being firebombed. Muslim communities in several nations in the West held public rallies in which copies of the book were burned. Several people associated with translating or publishing the book were attacked, seriously injured, and even killed.[10] Many more people died in riots in Third World countries.

On 24 September 1998, as a precondition to the restoration of diplomatic relations with Britain, the Iranian government, then headed by moderate Mohammad Khatami, gave a public commitment that it would "neither support nor hinder assassination operations on Rushdie."[11][12] Hardliners in Iran have however continued to reaffirm the death sentence.[13] In early 2005, Khomeini's fatwa was reaffirmed by Iran's spiritual leader, Ayatollah Ali Khamenei, in a message to Muslim pilgrims making the annual pilgrimage to Mecca.[14] Additionally, the Revolutionary Guards have declared that the death sentence on him is still valid.[15] Iran has rejected requests to withdraw the fatwa on the basis that only the person who issued it may withdraw it.[14] (The person who issued it is dead.)

Salman Rushdie reported that he still receives a "sort of Valentine's card" from Iran each year on February 14 letting him know the country has not forgotten the vow to kill him. He was also quoted saying, "It's reached the point where it's a piece of rhetoric rather than a real threat."[16] Despite the threats on Rushdie, he has publicly said that his family has never been threatened and that his mother (who lived in Pakistan during the later years of her life) even received outpourings of support.[17]