The Seleucid ruler Demetrius II Nicator was at first successful in his efforts to reconquer Babylonia, however, the Seleucids were eventually defeated and Demetrius himself was captured by Parthian forces in 138 BCE. He was afterwards paraded in front of the Greeks of Media and Mesopotamia with the intention of making them to accept Parthian rule. Afterwards, Mithridates I had Demetrius sent to one of his palaces in Hyrcania. There Mithridates I treated his captive with great hospitality; he even married his daughter Rhodogune to Demetrius. According to Justin, Mithridates I had plans for Syria, and planned to use Demetrius as his instrument against the new Seleucid ruler Antiochus VII Sidetes (r. 138–129 BCE). His marriage to Rhodogune was in reality an attempt by Mithridates I to incorporate the Seleucid lands into the expanding Parthian realm. Mithridates I then punished the Parthian vassal kingdom of Elymais for aiding the Seleucids–he invaded the region once more and captured two of their major cities.

Around the same period, Mithridates I conquered the southwestern Iranian region of Persis and installed Wadfradad II as its frataraka; he granted him more autonomy, most likely in an effort to maintain healthy relations with Persis as the Parthian Empire was under constant conflict with the Saka, Seleucids, and the Mesenians. He was seemingly the first Parthian monarch to have an influence on the affairs of Persis. The coinage of Wadfradad II shows influence from the coins minted under Mithridates I. Mithridates I died in c. 132 BCE, and was succeeded by his son Phraates II.