It also deals another blow to the credibility of the June 14 poll, analysts say.
With his potential appeal to both reformists and conservatives, Rafsanjani was considered a major challenge to the establishment’s plans to hold a "peaceful" election and replace the unruly President Mahmud Ahmadinejad with an obedient, hard-line figure loyal to Supreme Leader Ali Khamenei.
Hard-liners had attacked the 78-year-old Rafsanjani over his age and past support for the opposition Green Movement, and had called on the Guardians Council to disqualify him.
His elimination, analysts say, is another indication of the increasingly authoritarian nature of the Islamic republic, where the circle of power has been steadily shrinking.
The pragmatic Rafsanjani has spent decades as one of the country’s key figures and held some of its top posts. He currently heads the Expediency Council, which mediates between the parliament and the Guardians Council.
Nevertheless his positions on many issues that have not been in line with the establishment are seen as a threat, according to Alireza Nader, a senior analyst at the Rand Corporation.
"The Guardians Council’s decision does show that Rafsanjani, who is considered to be a pillar of the revolution in Iran and a founder of the Islamic republic, faces a lot of opposition from within the political system. It also indicates how authoritarian and closed the Islamic republic has become as a political system -- so much so that Rafsanjani, one of the key figures, is not allowed to run for president," Nader explained.
New York-based Iranian journalist Roozbeh Mirebrahimi believes the banning of Rafsanjani from the June 14 vote marks a turning point for the Islamic republic.
"I think this is the most significant elimination, conducted by Khamenei’s team, of the current that support the thoughts of the founder of the Islamic republic, Ayatollah Khomeini. Even if the decision is overturned [through an intervention by Khamenei], the fact that this was allowed to happen demonstrates that Khamenei cannot tolerate even someone like Rafsanjani," Mirebrahimi said.
While the decision to ban Rafsanjani came as something of a surprise, the decision to ban Ahmadinejad’s right-hand man, Esfandiar Rahim Mashaei, was widely expected.
Mashaei, who has been accused of undermining the clergy, was quoted by the semiofficial hard-line news agency Fars as saying that he will appeal to Khamenei.
Rafsanjani did not have an immediate reaction to the Guardians Council’s decision.
His elimination will disappoint many Iranians who considered him the only acceptable option in next month’s vote.
Mehrzad Boroujerdi, director of Middle East studies at Syracuse University, says the decision to disqualify Rafsanjani is likely to deepen the gap between the establishment and parts of the population.
"It could lead to an increasing alienation of some parts of the society from the regime, more than the past. Those who came to the streets four years ago were met by force, and now they will feel that there is no likable candidate for them to vote for. I think we will witness a political dissociation between these segments of the society and the establishment," Boroujerdi predicted.
Ahead of the Interior Ministry’s announcement on May 21 of its list of approved candidates, parliament member Ali Motahari warned that excluding Rafsanjani would bring the very principles of the Islamic establishment into question.
And Ayatollah Haeri Shirazi, a member of the Assembly of Experts, warned in an open letter to Khamenei that the disqualification of “prominent” figures would damage the vote.
Boroujerdi says the Iranian establishment apparently decided that the fallout from banning Rafsanjani would be less costly than letting him compete in the election.
"In politics, any decision comes with a price. The coming of Rafsanjani would have had a price, and his disqualification also brings problems; [the authorities] had to weigh and see, with regard to their long term interests, which price they were willing to pay," Boroujerdi explained.
The Guardians Council approved a total of eight candidates for next month’s presidential poll, with nuclear negotiator Said Jalili considered one of the leading contenders.
Two moderate figures were also allowed to run: former nuclear negotiator Hassan Rohani, who is close to Rafsanjani, and former Vice President Mohammad Reza Aref, who held his post under former reformist President Mohammad Khatami.