After inheriting the empire of the Medes, Cyrus first had to consolidate his power over Iranian tribes on the Iranian plateau before expanding to the west. Croesus, king of Lydia in Asia Minor (Anatolia), had enlarged his domains at the expense of the Medes when he heard of the fall of Astyages, and Cyrus, as successor of the Median king, marched against Lydia. Sardis, the Lydian capital, was captured in 547 or 546, and Croesus was either killed or burned himself to death, though according to other sources he was taken prisoner by Cyrus and well treated. The Ionian Greek cities on the Aegean Sea coast, as vassals of the Lydian king, now became subject to Cyrus, and most of them submitted peacefully. Several revolts of the Greek cities were later suppressed with severity. Next Cyrus turned to Babylonia, where the dissatisfaction of the people with the ruler Nabonidus gave him a pretext for invading the lowlands. The conquest was quick, for even the priests of Marduk, the national deity of the great metropolis of Babylon, had become estranged from Nabonidus. In October 539 BC, the greatest city of the ancient world fell to the Persians.

In the Bible (e.g., Ezra 1:1-4), Cyrus is famous for freeing the Jewish captives in Babylonia and allowing them to return to their homeland. Cyrus was also tolerant toward the Babylonians and others. He conciliated local populations by supporting local customs and even sacrificing to local deities. The capture of Babylon delivered not only Mesopotamia into the hands of Cyrus but also Syria and Palestine, which had been conquered previously by the Babylonians. The ruler of Cilicia in Asia Minor had become an ally of Cyrus when the latter marched against Croesus, and Cilicia retained a special status in Cyrus' empire. Thus it was by diplomacy as well as force of arms that he established the largest empire known until his time.

Cyrus seems to have had several capitals. One was the city of Ecbatana, modern Hamadan, former capital of the Medes, and another was a new capital of the empire, Pasargadae, in Persis, said to be on the site where Cyrus had won the battle against Astyages. The ruins today, though few, arouse admiration in the visitor. Cyrus also kept Babylon as a winter capital.

No Persian chauvinist, Cyrus was quick to learn from the conquered peoples. He not only conciliated the Medes but united them with the Persians in a kind of dual monarchy of the Medes and Persians. Cyrus had to borrow the traditions of kingship from the Medes, who had ruled an empire when the Persians were merely their vassals. A Mede was probably made an adviser to the Achaemenian king, as a sort of chief minister; on later reliefs at Persepolis, a capital of the Achaemenian kings from the time of Darius, a Mede is frequently depicted together with the great king. The Elamites, indigenous inhabitants of Persis, were also the teachers of the Persians in many ways, as can be seen, for example, in the Elamite dress worn by Persians and by Elamite objects carried by them on the stone reliefs at Persepolis. There also seems to have been little innovation in government and rule, but rather a willingness to borrow, combined with an ability to adapt what was borrowed to the new empire. Cyrus was undoubtedly the guiding genius in the creation not only of a great empire but in the formation of Achaemenian culture and civilization.

Little is known of the family life of Cyrus. He had two sons, one of whom, Cambyses, succeeded him; the other, Bardiya (Smerdis of the Greeks), was probably secretly put to death by Cambyses after he became ruler. Cyrus had at least one daughter, Atossa (who married her brother Cambyses), and possibly two others, but they played no role in history.

When Cyrus defeated Astyages he also inherited Median possessions in eastern Iran, but he had to engage in much warfare to consolidate his rule in this region. After his conquest of Babylonia, he again turned to the east, and Herodotus tells of his campaign against nomads living east of the Caspian Sea. According to the Greek historian, Cyrus was at first successful in defeating the ruler of the nomads--called the Massagetai--who was a woman, and captured her son. On the son's committing suicide in captivity, his mother swore revenge and defeated and killed Cyrus. Herodotus' story may be apocryphal, but Cyrus' conquests in Central Asia were probably genuine, since a city in farthest Sogdiana was called Cyreschata, or Cyropolis, by the Greeks, which seems to prove the extent of his Eastern conquests.