The country that the Greeks called Baktria with its double-named capital of Baktra-Zariaspa was located on the plain that comprises northern Afghanistan from the Hindu-Kush mountains in the south to the Amudaria River in the north and west, and the Badakhshan mountains in the east. During the Bronze Age, hundreds of desert oasis settlements arose on both sides of the Amudaria. The first written references to Baktria occur after its inclusion in the Achaemenid kingdom. During Alexander the Great's campaign in Persia, a relative of the Persian king, Darius III Commodanus, and satrap of Baktria-Sogdia, Bessos, commanded the Baktrian cavalry at the Battle of Gaugamela. The history of this period is generally viewed as an interlude marking the transition from the end of Greek rule to the beginning of the Kushan Empire. It is generally agreed that the Kushans were one of the several tribes of the Yuezhi, among whom some probably spoke Tokharian, mentioned by the Chinese sources.

It was during the campaigns of Alexander the Great, after the Macedonians had overrun the western provinces of the Persian empire, that the eastern Iranian element became especially prominent in the Persian camp. The majority of the eastern Iranian troops had been mustered by Bessus, who after the Persian defeat quickly emerged as the most powerful of the Persian leaders under Darius III. After the assassination of the king, it was Bessus who assumed the royal prerogatives, and retired to his satrapy of Bactria to carry on the struggle against Alexander in eastern Iran. The complex and disturbed succession of the later Indo-Bactrian rulers was to a large extent the consequence of a far-reaching event. After the fall of the Kushan dynasty in AD 225, the provinces of Gandhara, Bactria and Sogdiana passed under the rule of Sasanian governors who bore the title of Kushanshah 'King of the Kushans'. This Persian administration continued until about AD 360.