The Ottomans, a Sunni dynasty, considered the active recruitment of Turkmen tribes of Anatolia for the Safavid cause as a major threat. To counter the rising Safavid power, in 1502, Sultan Bayezid II forcefully deported many Shiʻite Muslims from Anatolia to other parts of the Ottoman realm. In 1511, the Şahkulu rebellion was a widespread pro-Shia and pro-Safavid uprising directed against the Ottoman Empire from within the empire. Furthermore, by the early 1510s Ismail's expansionistic policies had pushed the Safavid borders in Asia Minor even more westwards. The Ottomans soon reacted with a large-scale incursion into Eastern Anatolia by Safavid ghazis under Nūr-ʿAlī Ḵalīfa. This action coincided with the accession to the Ottoman throne in 1512 of Sultan Selim I, Bayezid II's son, and it was the casus belli leading to Selim's decision to invade neighbouring Safavid Iran two years later.

In 1514, Sultan Selim I marched through Anatolia and reached the plain of Chaldiran near the city of Khoy, where a decisive battle was fought. Most sources agree that the Ottoman army was at least double the size of that of Ismāʻil; furthermore, the Ottomans had the advantage of artillery, which the Safavid army lacked. Although Ismāʻil was defeated and his capital was captured, the Safavid empire survived. The war between the two powers continued under Ismāʻil's son, Emperor Tahmasp I, and the Ottoman Sultan Suleiman the Magnificent, until Shah Abbās retook the area lost to the Ottomans by 1602.

The consequences of the defeat at Chaldiran were also psychological for Ismāʻil: the defeat destroyed Ismāʻil's belief in his invincibility, based on his claimed divine status. His relationships with his Qizilbash followers were also fundamentally altered. The tribal rivalries among the Qizilbash, which temporarily ceased before the defeat at Chaldiran, resurfaced in intense form immediately after the death of Ismāʻil, and led to ten years of civil war (1524–1533) until Shāh Tahmāsp regained control of the affairs of the state. The Chaldiran battle also holds historical significance as the start of over 300 years of frequent and harsh warfare fueled by geo-politics and ideological differences between the Ottomans and the Iranian Safavids (as well as successive Iranian states) mainly regarding territories in Eastern Anatolia, the Caucasus, and Mesopotamia.