With the exception of some hotels, some high-end (tourist-focused) retail, and many shops at the airport, the only currency used is Turkish Lira.
Anywhere that does accept other currencies will do it at a relatively poor exchange rate, so even where it's possible, I wouldn't recommend it.
However Money Changers are pretty much omnipresent in Istanbul - at least in the tourist focused areas. It's basically impossible to turn around and not see more than one. These will happily change your Euro or US Dollars into Turkish Lira.
Be careful when changing money as there are some scams. For example, when I was there a few weeks ago the exchange rate was around 2.44 Lira to the US$, however one money changer I noticed was offering 2.244, presumably hoping people wouldn't notice the difference...