Phraates I is recorded as expanding Parthia's control past the Gates of Alexander and occupied Apamea Ragiana. The locations of these are unknown. Yet the greatest expansion of Parthian power and territory took place during the reign of his brother and successor Mithridates I (r. c. 171–132 BCE), whom Katouzian compares to Cyrus the Great (d. 530 BCE), founder of the Achaemenid Empire.

Mithridates I turned his sights on the Greco-Bactrian Kingdom which had been considerably weakened as a result of its wars against the neighbouring Sogdians, Drangianans and Indians. The new Greco-Bactrian king Eucratides I (r. 171–145 BCE) had usurped the throne and was as a result met with opposition, such as the rebellion by the Arians, which was possibly supported by Mithridates I, as it would serve to his advantage. Sometime between 163–155 BCE, Mithridates I invaded the domains of Eucratides, whom he defeated and seized Aria, Margiana and western Bactria from. Eucratides was supposedly made a Parthian vassal, as is indicated by the classical historians Justin and Strabo. Merv became a stronghold of Parthian dominance in the northeast. Some of Mithridates I's bronze coins portray an elephant on the reverse with the legend "of the Great King, Arsaces." The Greco-Bactrians minted coins with images of elephants, which suggests that Mithridates I's coin mints of the very animal was possibly to celebrate his conquest of Bactria.