It's fair to say that Iago has a bit of a chip on his shoulder. A soldier from the lower-classes, he believes that he's been constantly passed over for promotion in favor of the likes of Othello and Cassio, despite the fact that he's proved himself in the field over many years. As such, Iago deeply resents these men and the society they represent, even though Othello, due to his skin color, is still regarded as something of an outsider.
In any case, Iago feels incredibly bitter and insecure. And it's no surprise that such bitterness and insecurity should plant the demon seed of jealousy into his mind and that he comes to believe that his wife Emilia is having an affair with the two men he hates most in all the world.
There's no evidence that the loyal and faithful Emilia is cheating on her husband. But for someone as bitter and as insecure as Iago, a little matter like evidence is completely unimportant; suspicions are all that he needs.
Regarding Othello, those suspicions surface in Iago's soliloquy in act 1, scene 3:
[I]t is thought abroad that 'twixt my sheets
He's done my office. I know not if 't be true,
But I, for mere suspicion in that kind,
Will do as if for surety. (I, iii, 324–327)
In other words, Iago's heard some rumors that Othello's been bedding his wife and although he doesn't know for certain if those rumors are true, mere suspicion is enough for him.
Iago expresses his suspicions of Othello in another soliloquy later on in the play, this time in act 2, scene 1:
For that I do suspect the lusty Moor
Hath leaped into my seat. (II, i, 220–21)
For good measure, Iago also expresses his suspicions of Cassio:
For I fear Cassio with my night-cape too. (II, i, 232)
In both cases, Iago's jealousy presents an additional reason for him to want to destroy these men. Already feeling resentful towards them for taking what he believes to be the promotion that is rightfully his, he can now use his unfounded suspicion that they are sleeping with his wife as a further justification for embarking upon his dastardly revenge plot.
Further Reading
Iago's suspicion is just an added weapon in his acidic arsenal for revenge against both Othello and Cassio. He hates the two so much that he continuously seeks reasons to support his bitterness and lust for revenge. His resentment for the two stems from the fact that, first, the general humiliated him by not appointing him as his lieutenant, a position Iago felt he was entitled to since he had been so loyal to Othello. And, second, that Othello named the young and inexperienced Cassio, a foreigner, instead. Furthermore, Iago seems to have always disliked the idea of Othello, also a foreigner, being his master. Also, he despises the fact that Cassio is young and handsome; qualities he apparently does not have.
Believing that both men had had sexual relations with his wife, Emilia, strengthens Iago's resolve to punish them...
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for their so-called indiscretion. He then ruthlessly proceeds to attempt the destruction of both men—a venture in which he achieves both success and failure.
He manages to manipulate Othello and Cassio to such an extent that Othello later dismisses Cassio. Othello is also so overwhelmed by jealousy due to Iago's sly orchestration that he kills Desdemona, his beautiful wife, and later commits suicide. Iago's bid to have Cassio murdered fails when his unfortunate puppet, Roderigo, does not kill him but is himself mortally wounded in a planned skirmish with Cassio.
Iago, in a soliloquy, first declares his suspicion that Othello has had an affair with Emilia at the end of act 1, scene 3, where he states:
I hate the Moor:And it is thought abroad, that 'twixt my sheetsHe has done my office:
By saying that Othello "has done my office", he means that Othello was doing the duties that he, as Emilia's husband, is supposed to perform: having carnal relations with her. However, Iago does admit that he is not quite sure whether he should or should not believe the rumors but that
I, for mere suspicion in that kind,Will do as if for surety.
He will, therefore, conclude that the stories themselves are substantive proof for why he should hate the general. In his warped thinking, Iago clearly believes that he is defending his honor.
Iago again, in another soliloquy, confirms his belief in act 2, scene 1, when he says:
For that I do suspect the lusty MoorHath leap'd into my seat; the thought whereofDoth, like a poisonous mineral, gnaw my inwards;And nothing can or shall content my soulTill I am even'd with him,
In this instance, he makes his intentions obvious. He wants to get even with the general for cheating with his wife. "Hath leap'd into my seat" as in the previous instance, makes it clear that he believes that Othello had usurped his position and committed adultery with Emilia.
In the same soliloquy, he also states his suspicion of Cassio:
For I fear Cassio with my night-cap too—
He suggests that Cassio might have also slept with Emilia and that it is, therefore, his duty to punish the lieutenant for his transgression by making Othello believe that his trusted lieutenant was doing the same with his wife, the beautiful Desdemona.
Iago first mentions his suspicion that Othello has had sex with Emilia in Act 1 Scene 3, ln 368 (in the Cambridge School Othello--might be different line numbers in your text), when he says, "I hate the Moor, and 'tis thought abroad that 'twixt my sheets he has done my office." He refers to his suspicions again in Act 2 Scene 1 line 275, when he says, "For that I do suspect that the lusty Moor hath leaped into my seat". Both of these are vague references, and easy to miss. You have to know that both doing someone's office and leaping into someone's seat are euphemisims for sexual activity. Actually, almost everything in this play is a euphemism for sexual activity, so it's not much of a leap. The most important thing is that it is NOT evident, at least not for anyone but Iago. He says himself that he has no proof, but because he has heard the rumour he will assume it is true. (Emilia, later in the play, chides him for suspecting that she had an affair with Othello). These are the only three pieces of evidence that I know of that link Othello to Emilia. The other person that Iago suspects of being with Emilia is Cassio--he mentions this in the same soliloquy in Act 2 Scene 1--he says, "for I fear Cassio with my night-cap too". Again, the language is vague and easy to miss. A "night-cap" is a hat one wears to bed, or a drink that helps one sleep; however, in this instance, it is an action that puts one (men anyways) to sleep.