It was probably in 340 or 339 BCE that Artaxerxes finally succeeded in conquering Egypt. After years of extensive and meticulous preparations, the King assembled and led in person a large host which included Greek mercenaries from Thebes, Argos, Asia Minor, and those commanded by the turncoat mercenary Mentor of Rhodes, as well as a war fleet and a number of transport ships. Although the Artaxerxes's army considerably outnumbered that of his Egyptian counterpart Nectanebo II, the difficulty of marching through the dry land south of Gaza and the many rivers of Upper Egypt still posed, as in previous invasions, a challenge, which was compounded, according to Diodorus Siculus, by the refusal of the Persians to make use of local guides. The invasion started poorly, as Artaxerxes lost some troops to quicksand at Barathra, and an attempt by his Theban troops to take Pelusium was successfully counterattacked by the garrison.

Artaxerxes then created three divisions of shock troops, each with a Greek commander and a Persian supervisor, while remaining himself in command of the reserves. One unit, to which he assigned the Thebans, a force of cavalry and Asiatic infantry, was tasked with taking Pelusium, while a second, commanded by Mentor of Rhodes and the eunuch Bagoas, was sent against Bubastis. The third division, which comprised the Argives, some unspecified elite troops and 80 triremes, was to establish a bridgehead on the opposite bank of the Nile. After an attempt to dislodge the Argives failed, Nectanebo retreated to Memphis, which prompted the besieged garrison of Pelusium to surrender. Bubastis likewise capitulated, as the Greek mercenaries in the garrison came to terms with the Persians after falling out with the Egyptians. This was followed by a wave of surrenders, which opened the Nile to Artaxerxes's fleet and caused Nectanebo to lose heart and abandon his country.

After this victory over the Egyptians, Artaxerxes had the city walls destroyed, started a reign of terror, and set about looting all the temples. Persia gained a significant amount of wealth from this looting. Artaxerxes also raised high taxes and attempted to weaken Egypt enough that it could never revolt against Persia. For the 10 years that Persia controlled Egypt, believers in the native religion were persecuted and sacred books were stolen. Before he returned to Persia, he appointed Pherendares as satrap of Egypt. With the wealth gained from his reconquering Egypt, Artaxerxes was able to amply reward his mercenaries. He then returned to his capital having successfully completed his invasion of Egypt.