Research on the ineffectiveness of political parties in Iran is mainly focused on historical, cultural, social, and economic factors. However, there is a little research based on the institutional perspective in this field, leading to negligence of state party politics. Following an institutional perspective, this paper examines party politics of the political system and its impact on the ineffectiveness of political parties in Iran. Political systems adopt their own party politics in line with different approaches, hence exerting different effects on the life of political parties. Therefore, the present study compares the approaches of party politics adopted by Islamic Republic of Iran with those adopted by Federal Republic of Germany, as the pioneer in party policy-making in the world. The central questions are, what are the differences between the party politics in Iran and in Germany? and how do these differences influence the life of political parties in Iran? According to the results, the approach in Iran’ s state party politics is controlling and restrictive. This feature, assuming other conditions are good, has made it difficult for political parties to form, grow, and operate effectively and thus their ineffectiveness. Finally, some suggestions are proposed for favorable party policy-making in Iran.