Before the conquests of Alexander this area had been a satrapy nominally owing allegiance to the Persians. When Alexander set about his career of conquest he transformed it into an outpost of Hellenism. Its coins are particularly important, as apart from them there is very little information about this satrapy later kingdom, extant. A few scattered references in Greek historians and geographers survive; one reference in Indian Buddhist literature, and a few impressions of papyri, are what remain of this land of a thousand cities.

After Alexanders conquest the satrapy remained turbulent. Around 256 BC Diodotos I revolted against Seleukid rule and established a kingdom. This kingdom reached its zenith n the second century BC, with contacts in India and western China. At this time king Menander appears in one of the Buddhist canonical sutras, as king Milinda, the just searcher after truth and convert to Buddhism.

During this period the Baktrian kings issued coins of nickel, anticipating by many centuries the first production and use of a quintessentially modern coinage material.

The Baktrian kingdom began to fall apart late in the second century, when it split into two parts under assault by hostile tribes, mainly Scythians in the west and Yueh-Chih, later to become the Kushans, in the east. The last of the Indo-Greeks, Hermaios, fell to the invaders around the beginning of our era.