Alexander, who quickly conquered the Persian Empire under its last Achaemenid dynast, Darius III, died young in 323 BC, leaving an expansive empire of partly Hellenised culture without an adult heir. The empire was put under the authority of a regent in the person of Perdiccas, and the territories were divided among Alexander's generals, who thereby became satraps, at the Partition of Babylon, all in that same year.

In the region of Punjab, Chandragupta Maurya (Sandrokottos) founded the Maurya Empire in 321 BC.

Seleucus established himself in Babylon in 312 BC, the year used as the foundation date of the Seleucid Empire.

The rise of Seleucus in Babylon threatened the eastern extent of Antigonus I territory in Asia. Antigonus, along with his son Demetrius I of Macedon, unsuccessfully led a campaign to annex Babylon. The victory of Seleucus ensured his claim of Babylon and legitimacy. He ruled not only Babylonia, but the entire enormous eastern part of Alexander's empire, as described by Appian: Always lying in wait for the neighboring nations, strong in arms and persuasive in council, he [Seleucus] acquired Mesopotamia, Armenia, 'Seleucid' Cappadocia, Persis, Parthia, Bactria, Arabia, Tapouria, Sogdia, Arachosia, Hyrcania, and other adjacent peoples that had been subdued by Alexander, as far as the river Indus, so that the boundaries of his empire were the most extensive in Asia after that of Alexander. The whole region from Phrygia to the Indus was subject to Seleucus.

Expecting a confrontation, Seleucus gathered his army and marched to the Indus. It is said that Chandragupta could have fielded a conscript army of 600,000 men and 9,000 war elephants. But instead, a treaty occurred in which Chandragupta received, the vast territory west of the Indus, including the Hindu Kush, modern-day Afghanistan, and the Balochistan province of Pakistan. It is generally thought that Chandragupta married Seleucus's daughter, or a Macedonian princess, a gift from Seleucus to formalize an alliance. In a return gesture, Chandragupta sent 500 war elephants, a military asset that would play a decisive role at the Battle of Ipsus in 301 BC.

Following his and Lysimachus' victory over Antigonus Monophthalmus at the decisive Battle of Ipsus in 301 BC, Seleucus took control over eastern Anatolia and northern Syria.

An alternative capital was established at Seleucia on the Tigris, north of Babylon.

Seleucus's son and successor, Antiochus I Soter, was left with an enormous realm consisting of nearly all of the Asian portions of the Empire but faced with Antigonus II Gonatas in Macedonia and Ptolemy II Philadelphus in Egypt, he proved unable to pick up where his father had left off in conquering the European portions of Alexander's empire.

Seleucus's empire reached its greatest extent following the defeat of his erstwhile ally, Lysimachus, at Corupedion in 281 BC, after which Seleucus expanded his control to encompass western Anatolia.

The rulers of Persis, called Fratarakas, also seem to have established some level of independence from the Seleucids during the 3rd century BC, especially from the time of Vahbarz. They would later overtly take the title of Kings of Persis, before becoming vassals to the newly formed Parthian Empire.

Antiochus II's son Seleucus II Callinicus came to the throne around 246 BC.

Seleucus II was soon dramatically defeated in the Third Syrian War against Ptolemy III of Egypt and then had to fight a civil war against his own brother Antiochus Hierax. Taking advantage of this distraction, Bactria and Parthia seceded from the empire.

Diodotus, governor for the Bactrian territory, asserted independence in around 245 BC, although the exact date is far from certain, to form the Greco-Bactrian Kingdom.

A revival would begin when Seleucus II's younger son, Antiochus III the Great, took the throne in 223 BC.

Although initially unsuccessful in the Fourth Syrian War against Egypt, which led to a defeat at the Battle of Raphia (217 BC), Antiochus would prove himself to be the greatest of the Seleucid rulers after Seleucus I himself.

When he returned to the west in 204 BC, Antiochus found that with the death of Ptolemy IV, the situation now looked propitious for another western campaign.

Antiochus and Philip V of Macedon then made a pact to divide the Ptolemaic possessions outside of Egypt, and in the Fifth Syrian War, the Seleucids ousted Ptolemy V from the control of Coele-Syria. The Battle of Panium (200 BC) definitively transferred these holdings from the Ptolemies to the Seleucids. Antiochus appeared, at the least, to have restored the Seleucid Kingdom to glory.

Following the defeat of his erstwhile ally Philip by Rome in 197 BC, Antiochus saw the opportunity for expansion into Greece itself. Encouraged by the exiled Carthaginian general Hannibal, and making an alliance with the disgruntled Aetolian League, Antiochus launched an invasion across the Hellespont. With his huge army, he aimed to establish the Seleucid empire as the foremost power in the Hellenic world, but these plans put the empire on a collision course with the new rising power of the Mediterranean, the Roman Republic. At the battles of Thermopylae (191 BC) and Magnesia (190 BC), Antiochus's forces suffered resounding defeats, and he was compelled to make peace and sign the Treaty of Apamea (188 BC), the main clause of which saw the Seleucids agree to pay a large indemnity, to retreat from Anatolia and to never again attempt to expand Seleucid territory west of the Taurus Mountains.

The reign of his son and successor Seleucus IV Philopator (187–175 BC) was largely spent in attempts to pay the large indemnity, and Seleucus was ultimately assassinated by his minister Heliodorus.

Antiochus died in 187 BC on another expedition to the east, where he sought to extract money to pay the indemnity.

Seleucus' younger brother, Antiochus IV Epiphanes, now seized the throne. He attempted to restore Seleucid power and prestige with a successful war against the old enemy, Ptolemaic Egypt, which met with initial success as the Seleucids defeated and drove the Egyptian army back to Alexandria itself. As the king planned on how to conclude the war, he was informed that Roman commissioners, led by the Proconsul Gaius Popillius Laenas, were near and requesting a meeting with the Seleucid king. Antiochus agreed, but when they met and Antiochus held out his hand in friendship, Popilius placed in his hand the tablets on which was written the decree of the senate and told him to read it. When the king said that he would call his friends into council and consider what he ought to do, Popilius drew a circle in the sand around the king's feet with the stick he was carrying and said, "Before you step out of that circle give me a reply to lay before the senate." For a few moments, he hesitated, astounded at such a peremptory order, and at last replied, "I will do what the senate thinks right." He then chose to withdraw rather than set the empire to war with Rome again.

After the death of Antiochus IV Epiphanes, the Seleucid Empire became increasingly unstable. Frequent civil wars made central authority tenuous at best. Epiphanes' young son, Antiochus V Eupator, was first overthrown by Seleucus IV's son, Demetrius I Soter in 161 BC.

Demetrius I, attempted to restore Seleucid power in Judea particularly but was overthrown in 150 BC by Alexander Balas – an impostor who (with Egyptian backing) claimed to be the son of Epiphanes.

Alexander Balas reigned until 145 BC when he was overthrown by Demetrius I's son, Demetrius II Nicator. Demetrius II proved unable to control the whole of the kingdom, however. While he ruled Babylonia and eastern Syria from Damascus, the remnants of Balas' supporters – first supporting Balas' son Antiochus VI, then the usurping general Diodotus Tryphon – held out in Antioch.

Meanwhile, the decay of the Empire's territorial possessions continued apace. By 143 BC, the Jews in the form of the Maccabees had fully established their independence.

Parthian expansion continued as well. In 139 BC, Demetrius II was defeated in battle by the Parthians and was captured. By this time, the entire Iranian Plateau had been lost to Parthian control.

Demetrius Nicator's brother, Antiochus VII Sidetes, took the throne after his brother's capture. He faced the enormous task of restoring a rapidly crumbling empire, one facing threats on multiple fronts.

Hard-won control of Coele-Syria was threatened by the Jewish Maccabee rebels. Once-vassal dynasties in Armenia, Cappadocia, and Pontus were threatening Syria and northern Mesopotamia; the nomadic Parthians, brilliantly led by Mithridates I of Parthia, had overrun upland Media (home of the famed Nisean horse herd); and Roman intervention was an ever-present threat. Sidetes managed to bring the Maccabees to heel and frighten the Anatolian dynasts into a temporary submission; then, in 133, he turned east with the full might of the Royal Army (supported by a body of Jews under the Hasmonean prince, John Hyrcanus) to drive back the Parthians.

Sidetes' campaign initially met with spectacular success, recapturing Mesopotamia, Babylonia, and Media. In the winter of 130/129 BC, his army was scattered in winter quarters throughout Media and Persis when the Parthian king, Phraates II, counter-attacked. Moving to intercept the Parthians with only the troops at his immediate disposal, he was ambushed and killed at the Battle of Ecbatana in 129 BC. Antiochus Sidetes is sometimes called the last great Seleucid king.

By 100 BC, the once-formidable Seleucid Empire encompassed little more than Antioch and some Syrian cities. Despite the clear collapse of their power, and the decline of their kingdom around them, nobles continued to play kingmakers on a regular basis, with occasional intervention from Ptolemaic Egypt and other outside powers. The Seleucids existed solely because no other nation wished to absorb them – seeing as they constituted a useful buffer between their other neighbors. In the wars in Anatolia between Mithridates VI of Pontus and Sulla of Rome, the Seleucids were largely left alone by both major combatants.

Mithridates' ambitious son-in-law, Tigranes the Great, king of Armenia, however, saw an opportunity for expansion in the constant civil strife to the south. In 83 BC, at the invitation of one of the factions in the interminable civil wars, he invaded Syria and soon established himself as ruler of Syria, putting the Seleucid Empire virtually at an end.

Once Mithridates was defeated by Pompey in 63 BC, Pompey set about the task of remaking the Hellenistic East, by creating new client kingdoms and establishing provinces. While client nations like Armenia and Judea were allowed to continue with some degree of autonomy under local kings, Pompey saw the Seleucids as too troublesome to continue; doing away with both rival Seleucid princes, he made Syria into a Roman province.