Seleucia, as such, was founded in about 305 BCE,as the first capital of the Seleucid Empire. Although Seleucus soon moved his main capital to Antioch, in northern Syria, Seleucia became an important center of trade, Hellenistic culture, and regional government under the Seleucids. The city was populated by Greeks, Syrians and Jews.

To make his capital into a metropolis, Seleucus forced almost all inhabitants of Babylon, except the local temple priests/supporting workers, to leave and resettle in Seleucia. A tablet dated 275 BCE states that the inhabitants of Babylon were transported to Seleucia, where a palace and a temple (Esagila) were built. Standing at the confluence of the Tigris River with a major canal from the Euphrates, Seleucia was placed to receive traffic from both great waterways.