Cloob website was launched 12 years ago as the Iranian answer to Facebook and Google's now-dead Orkut, and at its peak had some two million users in the country.
But the challenge of monitoring the deluge of photos from women not to show hair and removing politically sensitive comments led to frequent clashes with the authorities.
"Cloob.com was entirely blocked three times and the last time it took 28 days to unblock it," said company director Mohammad Javad Shakouri Moghadam in a blog post.
Iran banned Facebook primarily due to lack of oversight, especially women sharing photos of themselves without a headscarf, which is illegal under the country's Islamic laws.
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But sites such as Instagram are not banned and have boomed in Iran, while messaging service Telegram has some 25 million users in the country.
Officials say they cannot ban popular online services as long as there is no local alternative.
He said he also faced frequent legal battles over his other companies, such as video sharing site Aparat and streaming service Filmio.
"These days, some have started to... sue the new wave of content creators such as Aparat and other services -- a source of domestic content creation which would definitely be of benefit to our country and culture," he said.
President Hassan Rouhani was re-elected in May promising to soften social restrictions.
He appointed the Islamic republic's youngest-ever minister, 36-year-old Mohammad-Javad Azari Jahromi, to head the communications portfolio.
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