Nike said this year about 60 percent of the players at the World Cup would be wearing the company's cleats, while competitor Adidas will be outfitting 12 of 32 teams in this year's games.
Despite Iran being ranked the top team in the Asian Football Confederation, the team has struggled through the years in gaining sponsorships as a result of international sanctions. Nike does sponsor individual Iranian players who compete in soccer clubs outside of their home nations like Swedish-born Iranian player Saman Ghoddos. It is unclear if he will also be effected by Nike's decision.
This move comes right before Iran's first game against Morocco and is being condemned by Iranian interest groups and Iranians.
"For many Iranian Americans, the World Cup is a rare chance to put aside the politics that complicate our relationship with our ancestral homeland and just enjoy rooting for Team Melli," the National Iranian American Council told CNBC. "Nike is dragging politics back into the picture and souring what should be a global celebration. Nike was an outspoken opponent of Trump's Muslim ban that targets Iranians, yet now here they are helping enforce this new shameful policy against Iranians. We hope they will join us in pressing for the Trump administration to reverse course and ensure sports aren't turned into a political tool."
Along with NIAC, Iran's team manager Carlos Queiroz has called on FIFA, the sport's governing body, to step in.
"Players get used to their sports equipment and it's not right to change them a week before such important matches," he said. FIFA has yet to respond.
Nike, however, is not the only company to wade into geopolitical hot water. This past winter South Korean tech company Samsung refused to give commemorative phones to Iranian and North Korean athletes, citing United Nations sanctions on luxury goods. The move not only went to the Olympic governing body, but prompted Iranian governmental officials to threaten trade ramifications.
Samsung did eventually reverse course, apologizing for the decision.
Adidas, the German-based sports retailer, also cited sanctions at the last World Cup as the reason for not outfitting the Iranian soccer players. This year the company, according to head of the Iranian football federation, gave a steep discount to the Iranian team to buy uniforms, although it does not officially sponsor the team.
CNBC reached out to Adidas for comment. Nike said: "The sanctions mean that, as a U.S. company, we cannot provide shoes to players in the Iran National team at this time."