Dragon carpets are so named after the prominent stylized dragons that decorate them. Impressive in size and design, they are among the most distinctive products of the Caucasian regions of Shirvan and Karabagh and exemplify the local village carpet-weaving tradition. In the course of the 17th and 18th centuries the area was part of the Safavid empire, and supported the economic ambitions of Shah Abbās I (r. 1588–1629), who established and funded many textile factories in the area.

Because of the proximity with the court, Caucasian carpets were influenced by the designs used for the royal carpets produced on Iranian soil, which included dragons and other fabulous beasts. Less sophisticated than their Persian counterparts, they nonetheless appealed to local nobles and wealthy merchants.