When Shah Abbas I tolerated Sufism in Iran, the tide also turned in favour of the Ismaili mission, providing benigh climate to the dais to propagate Ismailism. Imam Nizar is thus reported to have gone to Khorasan in 1014/1606 with few dais, where he concealed his identity, and assumed a Sufi sounding name, Shah Ataullah among the Nimatullahis. He became the qutb (pole) of the Nimatullahis most probably in Nishapur, Marw, Herat, Balkh and Sebzewar in Khorasan province. Nizar was probably the first Ismaili Imam to become the spiritual master of the Nimatullahis. Nasrollah Pourjavady and Peter Lamborn Wilson write in their write-up, "Ismailis and Nimatullahis" (Stvdia Islamica, vol., XLI, 1975, Paris, p. 117) that, "Shah Nizar is the first Ismaili Imam whose ties with the Nimatullahi order are probably definite." It seems that many Nimatullahis, the followers of Nizar known as Ataullahis had privily adhered Ismailism in Khorasan. When Nizar left Khorasan for Kirman, some of them also joined him. It appears from one extant qasida that Nizar had composed few qasida for them.
The Ismailis in Iran mostly resided in Khorasan, Kirman, Fars and Anjudan. The Ismailis, known as Ataullahis lived in Kirman as the peasants. The Ismailis in Fars were nomadic tribesmen, who were also called as Ataullahis. It is related that a number of slaves of Abayssinia had escaped from being sold at Port Abbas, and took refuge in Kirman and embraced Ismailism. They were very faithful warriors and rendered their services to Nizar as guards.
Mulla Shaikh Ali Gilani writes in "Tarikh-i Mazandaran" (comp. in 1044/1634, pp. 88-89) that, "Sultan Muhammad, the Banu Iskandar ruler of Kujur, who succeeded his father in 975/1567 was an Ismaili. He openly emboldened the propagation of Ismailism in Rustamdar. He seized Nur and other localities in Mazandaran and spread Ismaili creed as far as Sari. He died in 998/1590, and was succeeded by his eldest son Jahangir, who was also deep-rooted in Ismailism. He was obliged to go to the court of the Safavid Shah Abbas I, following the latter's conquest of Gilan and other Caspian provinces in 1000/1592. Later, Jahangir returned to Rustamdar, but he was arrested by the local lieutenant of Shah Abbas I, who had led a large force against him. Jahangir was sent to Qazwin, where he was executed in 1006/1598."
The Safavid king Abbas I (d. 1038/1629) had tolerated Sufism in Iran with the exception of the Nuqtawiya sect. Their leading leader, Khusaro was tied by the neck to a camel's saddle and dragged along the streets of Qazwin in 1000/1592. In the ensuing wave of persecution and mass killing, a large number of the leading Nuqtawiya leaders were slain in 1002/1594 in Kashan, Ispahan, Istahlanat in Fars and Qazwin. Their another leader, called Yousuf was stripped from the garb of life and fell from the seat onto the mortuary board. The fate of another prominent leader, Suleman Sawuji, a physician from Sawa, was put to death and the king Abbas I regarded his elimination equal to a pilgrimage to Mecca. Likewise, Mir Sayed Ahmad Kashani was arrested in the village of Nasrabad in the vicinity of Kashan, was cut in half by king's own sword. Since the followers of Nuqtawiya sect thickly populated in the villages of the Ismailis, and were also collaborated with each other, it it possible that the Ismailis had taken necessary measures to ward off the hovering danger.
In Syria, the inroads of the bigoted Nusairis recurred on the Ismaili villages in 999/1591, and pillaged their properties. This time, the Ismailis repelled the band of Nusairis from their territories with their own resources.