Ethnicity in Iran, especially in Kurdish regions, has a complex relationship with development policies and can lead to both strengthening ethnic convergence and national cohesion and intensifying divergence and distrust. The aim of the present study is to examine the impact of government development policies on the process of ethnic divergence in these regions. The study was conducted with a qualitative approach and using thematic analysis method. Data were collected through semi-structured interviews with 18 local residents, civil society activists, indigenous researchers, and development experts in the provinces of Kurdistan, Kermanshah, Ilam, and West Azerbaijan. Purposive and snowball sampling was used, and data analysis was conducted based on Brown and Clarke’s (2006) six-step framework. Findings show that existing development policies are often accompanied by inequity in services and resources, neglect of local language and culture, exclusion of indigenous elites, and dominance of a security perspective. These conditions reproduce themes such as “perception of developmental injustice”, “weakening of ethnic identity”, “invisibility of policy-making”, “security-oriented development”, “decline of social and institutional capital”, and “discriminatory education and cultural participation”. Therefore, the success of development policies in ethnic areas requires a change in approach from “security-oriented and centralization” to “participation-oriented and socio-cultural justice”.