Divorce is one of the social problems in our society and unfortunately, the divorce rate in Iran is high. Recently, Economist and Sociologists in the pathology of many social problems such as divorce have highlighted specific role of the economic roots of these problems (e.g. income and its fluctuations). In this article, we investigate the effect of household income volatility on divorce in Iran by separating the household income shocks into transitory and permanent components. The study uses panel data of 30 states in Iran for the period of 2004-2012 (8 years). We find that at the 5% level, transitory household income shocks increase the rate of divorce, while the rate of divorce are unaffected by permanent household income shocks. Moreover, some of the factors affecting the rate of divorce has investigated in the present study. The study finds that at the 5% level, unemployment rate, women's economic participation rate and region-of-residence indicator have significant positive effect on the divorce rate but the literacy rate and household income have negative effect on divorce rate. Urbanization ratio also (at the %10 level) has significant positive effect on the divorce rate.