Diodotus, the satrap of Bactria (and probably the surrounding provinces) founded the Greco-Bactrian Kingdom when he seceded from the Seleucid Empire around 250 BC and became King Diodotus I of Bactria. The preserved ancient sources (see below) are somewhat contradictory, and the exact date of Bactrian independence has not been settled. Somewhat simplified, there is a high chronology (c. 255 BC) and a low chronology (c. 246 BC) for Diodotos’ secession. The high chronology has the advantage of explaining why the Seleucid king Antiochus II issued very few coins in Bactria, as Diodotos would have become independent there early in Antiochus' reign. On the other hand, the low chronology, from the mid-240s BC, has the advantage of connecting the secession of Diodotus I with the Third Syrian War, a catastrophic conflict for the Seleucid Empire.
Diodotus, the governor of the thousand cities of Bactria (Latin: Theodotus, mille urbium Bactrianarum praefectus), defected and proclaimed himself king; all the other people of the Orient followed his example and seceded from the Macedonians. (Justin, XLI,4)
The new kingdom, highly urbanized and considered as one of the richest of the Orient (opulentissimum illud mille urbium Bactrianum imperium "The extremely prosperous Bactrian empire of the thousand cities" Justin, XLI,1 ), was to further grow in power and engage in territorial expansion to the east and the west:
The Greeks who caused Bactria to revolt grew so powerful on account of the fertility of the country that they became masters, not only of Ariana, but also of India, as Apollodorus of Artemita says: and more tribes were subdued by them than by Alexander... Their cities were Bactra (also called Zariaspa, through which flows a river bearing the same name and emptying into the Oxus), and Darapsa, and several others. Among these was Eucratidia, which was named after its ruler. (Strabo, XI.XI.I)
In 247 BC, the Ptolemaic empire (the Greek rulers of Egypt following the death of Alexander the Great) captured the Seleucid capital, Antioch. In the resulting power vacuum, the satrap of Parthia proclaimed independence from the Seleucids, declaring himself king. A decade later, he was defeated and killed by Arsaces of Parthia, leading to the rise of a Parthian Empire. This cut Bactria off from contact with the Greek world. Overland trade continued at a reduced rate, while sea trade between Greek Egypt and Bactria developed.