Any errors in digital elevation models (DEMs) will introduce errors directly in gravity anomalies and geoid models when used in interpolating Bouguer gravity anomalies. Errors are also propagated into the geoid model by the topographic and downward continuation (DWC) corrections in the application of Stokes’s formula. The effects of these errors are assessed by the evaluation of the absolute accuracy of nine independent DEMs for the Iran region. It is shown that the improvement in using the high-resolution Shuttle Radar Topography Mission (SRTM) data versus previously available DEMs in gridding of gravity anomalies, terrain corrections and DWC effects for the geoid model are significant. Based on the Iranian GPS/levelling network data, we estimate the absolute vertical accuracy of the SRTM in Iran to be 6.5 m, which is much better than the estimated global accuracy of the SRTM (say 16 m). Hence, this DEM has a comparable accuracy to a current photogrammetric high-resolution DEM of Iran under development. We also found very large differences between the GLOBE and SRTM models on the range of −750 to 550 m. This difference causes an error in the range of −160 to 140 mGal in interpolating surface gravity anomalies and −60 to 60 mGal in simple Bouguer anomaly correction terms. In the view of geoid heights, we found large differences between the use of GLOBE and SRTM DEMs, in the range of −1.1 to 1 m for the study area. The terrain correction of the geoid model at selected GPS/levelling points only differs by 3 cm for these two DEMs.