Creating a clear purposeful image of a city in the minds of its stakeholders –especially its residents- could attract more investors, tourists and immigrants. Urban management has received a remarkable attention in recent years. One of the most interesting topics in urban management is the concept of identity and especially image. As well as organizations and persons we can depict images for cities and one of the important factors in effective city management is managing the city’s image. In the other side of the coin, City’s image exhibits his identity, history and above all his attractiveness. Urban managers need to have as much knowledge as possible on all factors that affect the city image, in order to make better daily decisions and develop integrated city plans. The aim of this research is to investigate key factors affecting the formation of the internal image of a city from the perspective of its citizens, and the case of our study is Tehran. Pursuing such an objective, a list of factors was extracted from a comprehensive literature review. Following an explanatory method, 12 hypotheses about the relationship between each one of factors and “the formation of internal image of Tehran” were developed. A questionnaire was designed and used in a field survey. This questionnaire was distributed using a cluster-sampling method. The questionnaire the two sections of demographic information and dimensions affecting the formation of the internal image of Tehran. The reliability of the questionnaire was calculated via Cronbach's alpha as .842. The content validity of questionnaire was studied through interview with a group of selected expert. Moreover, it was assumed that since the instrument variables were extracted from original resources, its content validity could be satisfactory. The construct validity of the questionnaire was calculated using factor analysis technique. In order to analyze the research data, descriptive statistics, exploratory factor analysis, average test, confirmatory factor analysis and structural equation modeling (SEM) were used. In this research twelve aspects have been identified and also their status and degree of impact on the formation of the internal city image of Tehran were studied. Findings of the research indicate that among the citizens of Tehran the status of of social issues, university and education, business and innovation culture, environment, transportation, communication and traffic infrastructures, economics and commerce, self-awareness of citizens, and range of services are unsatisfactory and in case of other aspects (international status of the city, architectural and urban attraction, preservation of historical monuments) the status is satisfactory. Also structural equation modeling shows that priority of “formation of Tehran internal city image” model components are respectively four factors of : “economics and commerce”, “range of services”, “international status of the city” and “transportation, communication and traffic infrastructures”. We do believe that the effective application of these factors help city managers and mayors to makes better decisions to enhance citizen and residences life satisfaction.