Almost all the villages consisting of more than 20 households in Iran have been grid-connected by 2010 according to the Forth Five-Year Economic Development Plan (2005–2010) of the Iranian government; however, there are many isolated communities with less than 20 households that are still in need of electrification. Currently, the sole technology that provides electric power to such communities is diesel generator, which does only cause environmental problems and human health concerns, but also rank high in maintenance and operational costs. Due to the recent increasing attention of Renewable Energy Organization in Iran (acronymed as SUNA based on its Persian name) to the application of renewable energies, this paper aims to analyze the techno-economic feasibility of stand-alone hybrid PV–diesel energy systems for electrification of remote rural areas in eastern part of Iran where 5kWh/m2 solar radiation per day is a common feature. Through simulations based on HOMER software, this study presents a comprehensive comparative analysis among potential configurations of a system best suited to meet the needs of isolated Iranian communities.