The publication of The Satanic Verses in September 1988 caused immediate controversy in the Islamic world because of what was perceived as an irreverent depiction of the prophet Muhammad. The title refers to a disputed Muslim tradition that is related in the book. According to this tradition, Muhammad (Mahound in the book) added verses (sura) to the Qur'an accepting three goddesses who used to be worshipped in Mecca as divine beings. According to the legend, Muhammad later revoked the verses, saying the devil tempted him to utter these lines to appease the Meccans (hence the "Satanic" verses). However, the narrator reveals to the reader that these disputed verses were actually from the mouth of the Archangel Gibreel. The book was banned in many countries with large Muslim communities.

On 14 February 1989, a fatwā requiring Rushdie's execution was proclaimed on Radio Tehran by Ayatollah Ruhollah Khomeini, the spiritual leader of Iran at the time, calling the book "blasphemous against Islam" (chapter IV of the book depicts the character of an Imam in exile who returns to incite revolt from the people of his country with no regard for their safety). A bounty was offered for Rushdie's death, and he was thus forced to live under police protection for years afterward. On 7 March 1989, the United Kingdom and Iran broke diplomatic relations over the Rushdie controversy.