Around 850 BCE the original nomadic people who began the empire called themselves the Parsa and their constantly shifting territory Parsua, for the most part localized around Persis. The name "Persia" is a Greek and Latin pronunciation of the native word referring to the country of the people originating from Persis. The Persian term Xšāça, literally meaning "The Kingdom", was used to refer to the Empire formed by their multinational state.

The Achaemenid Empire was created by nomadic Persians. The Persians were an Iranian people who arrived in what is today Iran c. 1000 BCE and settled a region including north-western Iran, the Zagros Mountains and Persis alongside the native Elamites. The Persians were originally nomadic pastoralists in the western Iranian Plateau. The Achaemenid Empire may not have been the first Iranian empire, as the Medes, another group of Iranian peoples, possibly established a short-lived empire when they played a major role in the overthrow of the Assyrians.

The Achaemenian empire borrows its name from the ancestor of Cyrus the Great, the founder of the empire, Achaemenes. The term Achaemenid means "of the family of the Achaemenis/Achaemenes". Achaemenes was himself a minor seventh-century ruler of the Anshan in southwestern Iran, and a vassal of Assyria.