The agricultural sector has always been discussed as a major column in economic growth of a country. In this regard private investment is an important variable in the development of this sector. So the main aim of this study is investigating the effective factors on the investment of the private sector in Iran’s agriculture and then providing appropriate solution to increase it. Thus, the ARDL Model Pesaran & Shin’s framework was used for this purpose. The needed data for this study includes time-series data for the period of 1980-2010. The results showed that there is a long-run relationship between private investments, bank credit facilities to the agricultural sector, capital stock, inflation rate and wholesale prices. On the other hand, private investment is more sensitive than inflation in a way that one per cent increase in the inflation rate will cause 32/59 per cent increase in private investment and has less sensitivity to the bank credit facilities, including the banking system’s inefficiency in resource allocation and its orientation to inject resources to the public sector. So by making the government smaller on one hand and developing financial institution and credit on the other (hand), the possibility of investment in the private sector can be widely provided.

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