Louis I inherited a centralized kingdom and a rich treasury from his father. During the first years of his reign, Louis launched a crusade against the Lithuanians and restored royal power in Croatia; his troops defeated a Tatar army, expanding his authority towards the Black Sea. When his brother, Andrew, Duke of Calabria, husband of Queen Joanna I of Naples, was assassinated in 1345, Louis accused the queen of his murder and punishing her became the principal goal of his foreign policy. He launched two campaigns to the Kingdom of Naples between 1347 and 1350. Louis's arbitrary acts and atrocities committed by his mercenaries made his rule unpopular in Southern Italy. He withdrew all his troops from the Kingdom of Naples in 1351.

Like his father, Louis administered Hungary with absolute power and used royal prerogatives to grant privileges to his courtiers. However, he also confirmed the liberties of the Hungarian nobility at the Diet of 1351, emphasizing the equal status of all noblemen. At the same Diet, he introduced an entail system and a uniform rent payable by the peasants to the landowners, and confirmed the right to free movement for all peasants. He waged wars against the Lithuanians, Serbia, and the Golden Horde in the 1350s, restoring the authority of Hungarian monarchs over territories along frontiers that had been lost during previous decades. He forced the Republic of Venice to renounce the Dalmatian towns in 1358. He also made several attempts to expand his suzerainty over the rulers of Bosnia, Moldavia, Wallachia, and parts of Bulgaria and Serbia. These rulers were sometimes willing to yield to him, either under duress or in the hope of support against their internal opponents, but Louis's rule in these regions was only nominal during most of his reign. His attempts to convert his pagan or Orthodox subjects to Catholicism made him unpopular in the Balkan states. Louis established a university in Pécs in 1367, but it was closed within two decades because he did not arrange for sufficient revenues to maintain it.

Louis inherited Poland after his uncle's death in 1370. In Hungary, he authorized the royal free cities to delegate jurors to the high court hearing their cases and set up a new high court. At the beginning of the Western Schism, he acknowledged Urban VI as the legitimate pope. After Urban deposed Joanna and put Louis's relative Charles of Durazzo on the throne of Naples, Louis helped Charles occupy the kingdom.