The only goal was scored in the first-half by Brazilian forward Muriqui.
Al Sadd play Al Hilal in the last group game in Riyadh’s King Fahd Stadium to determine who will win Group C, while Foolad remain rooted to the bottom of the standings with three points. Lokomotiv Tashkent are in third place on four.
The home side controlled much of the first-half and scored in the 42nd minute.
Muriqui’s one-two with Hasan Al Haydos unlocked the Foolad backline and the Brazilian slotted the ball past Alireza Salimi to give Al Sadd the 1-0 lead.
The goal woke up the visitors who were a very different side in the second half.
Just before the hour mark Ahmad Al Nameh was just off target with a well-taken free-kick from 25-yards out.
Foolad nearly scored in the 70th minute when Mohasen Mosalman’s free-kick hit the post to deny the Iranian’s a point.
The win means Al Sadd picked up all three points and progressed to the Round of 16.