The study of language teacher and learner identity has turned into a vibrant line of research in recent years. Little research, however, has specifically addressed teachers' understanding of learner identity and the contributions this awareness offers to various aspects of their work. This study explored fifty Iranian EFL teachers' understanding of learner identity as relative to their practice in different language schools across the country. Data were collected via semi-structured interviews and analyzed through content analysis. The teachers viewed learner identity as a multi-layered concept encompassing various sociocultural aspects external to learners as well as individual aspects internal to learners as influencing their identity construction. Regarding the nexus between teacher practice and learner identity, not all the teachers agreed with the goal of raising learners' awareness of identity issues in practice, yet most of them referred to the substantial behavioral impact of teachers on learners' identity construction. The study offers implications for systematic incorporation of identity-related issues in teacher education programs in order to further enhance the teachers' associated awareness.