This study aimed at investigating various pragmatic functions of formulaic expressions of embarrassment (EOE) "Šarmandegy" as a form of ritual politeness (Taarof) in Persian refusals within the framework of Brown and Levinson's (1987) politeness theory and face constituting theory of Arundale (2010).76 hours of naturally occurring conversations of Persian native speakers were transcribed and qualitatively analyzed considering social status and social distance of the speakers. 280 refusals were extracted of which 94 refusals (33.5%) included various forms of EOE. Six sematic categories of formulaic structures of Taarof were found in refusals as mitigating strategies among which EOE had the highest frequency. Four pragmatic functions of preparator, disarmer, sweetener, and apology were found for EOE among which sweeteners and preparators were used in formal conversations with addressees of a higher social status. EOE with pragmatic functions of apology and disarmer were used in formal and informal interactions with addressees of different social status and social intimacy.