KISH, Iran — Two women giggle lightheartedly on the white sands, sitting in their knee-length pants with their bare legs and manicured toes touching the warm waters of the Persian Gulf. Down on the biking track, two men negotiate with a red-haired hooker in glossy makeup. A man whispers in the ears of passers-by, "New beverages available," using a code for Russian vodka.
Kish, a tiny coral island 10 miles off the coast, is definitely not an ordinary spot in the Islamic Republic, where for the past two decades women have been forbidden to expose body parts, and prostitution and the use of alcohol are weighty sins.
Over the past decade, Kish has come to be known as an oasis of luxury and laxity. It became a free-trade zone in 1989, when the authorities tried to recapture at least a sliver of the billions of dollars that fled the nation after the 1979 revolution by gradually loosening social restrictions in the hope of luring Iranians who tended to vacation in Dubai.
Now, a million tourists travel to Kish each year, almost all Iranians, and the authorities say they spend more than $100 million.
People are lured by the duty-free shops offering brand names in everything from cosmetics to clothing. Couples can jet-ski together or dive and explore the expansive coral reefs.
When they weary of the segregated beaches, they can rent a speed-boat for $5 an hour and swim anywhere around the island. There is no morality police to clamp down on prostitutes or the sale of alcohol, though both are illegal.
"It is very hard for us to compete in terms of entertainment like discos and night life with other resorts around the world," said Mohammad Kassaizadeh, director for public and international relations of the Kish Free Trade Zone. Instead, he said, the authorities stress Kish's natural beauty and relaxed atmosphere. Foreigners need no visa and have a separate beach where they can mingle freely.
Women are free to choose their clothing as long as they look modest. There is no obligation to wear the long loose coats mandatory on the mainland, and instead of head scarves, the women can wear hats.
Ten years ago, music became the first entertainment banned in Iran that was permitted in Kish. In the early days, bands were not allowed to play foreign songs or jaunty music that could encourage dancing. Now people clap or move along to all sorts of songs, from Frank Sinatra to banned Persian songs from pre-revolution days.
The island is filled with nearly 50 hotels and motels; unlike the situation in other parts of Iran, couples are not required to prove they are married to rent a room.
"I need to escape to Kish every few months to relax and get energy," said Niloofar Hashemi, 34, a business manager from Tehran, one of many younger Iranians who used to go to Turkey or Dubai but now increasingly favor Kish.
Ms. Hashemi said she spent the mornings wandering in the dozens of Western-style shopping malls, went jet-skiing in the afternoon, then sneaked liquor into a beach restaurant, where she enjoyed live music until after midnight.
"This is where I can find peace and a little freedom without the hassle of dealing with a foreign embassy to get a visa for a short vacation," she said.
At times, the authorities in Kish tighten up, apparently to avoid attracting greater interference from Iran's hard-liners. One movie theater was shut down recently for a few weeks after it played "Basic Instinct," with Sharon Stone and Michael Douglas. A handful of shops have been ordered to clear their windows of mannequins deemed too sexy.
The multimillion-dollar Grand Darius hotel, where journalists recently got a preview, is a reminder of the decadence very much associated with pre-Islamic rule. The hotel is owned by Hossein Sabet, an Iranian-born hotelier with extensive chains in the Canary Islands. It is named after Darius, the founder of the Persian empire, and modeled on the ancient city of Persepolis, in southern Iran. Male employees wear shorts; the female employees wear elegant, tight-fitting pants suits with small head scarves.
The rumor goes that Mr. Sabet received assurances from the authorities that guests would be exempt from mainland rules: that gender segregation would not be enforced and that women would not be required to cover their heads.
Mr. Sabet declined comment, saying only, "Kish has the potential for investment and development." His plans include a dolphinarium, a Disneyland-style amusement park and a vast aquarium, all of which are being built among the thousands of palms and citrus trees in his compound.
Two leaders of Friday Prayer, who are appointed by hard-liners, say they have good relations with Mr. Sabet.
"There is nothing un-Islamic here," said one, Hojatolislam Mohammad Ali Talib, who accompanied the first visitors to see Mr. Sabet's dolphins playing with their Ukrainian trainers to a loud techno beat.
"Kish was barren and deserted before Mr. Sabet started this place," he said. "Our religion favors pleasure and entertainment as long as it is not provocative. Plus, he has created jobs, and tourists are bringing money to the island. There is nothing un-Islamic about that."