The EU-Iran ‘Comprehensive Dialogue,’ launched in 1998 following the election of reformist President Khatami, did not achieve any significant re¬sults, mostly as a consequences of the controversy surrounding Iran’s nuclear program. It involved high-level discussions on political matters, as well as on energy and commercial relations (through the construction – by the European Commission – of two bilateral Working Groups). On the eve of the controversy (2002), despite many difficulties, the EU’s relations with Iran were developing in a positive direction. The negotiation of a Trade and Co-operation Agreement (TCA), linked to a Political Dialogue Agreement (PDA), was well on the way. Seven years later, despite continuous diplomatic efforts, and progress made by the International Atomic Energy Agency (IAEA) and Iran in the verification process of the peaceful nature of Iran’s nuclear infrastructure, EU-Iran relations have significantly degraded, which implies serious consequences in bilateral trade as well as with respect to the regional security situation. The purpose of this paper is to provide a critical analysis of the EU-Iran institutional dialogue framework and to assess the impact of the nuclear crisis on it, before examining prospects for the renewal of the EU engagement.