This article concerns the city of Ray, Iran (near Shahr-e-Rey) as a military objective, not the large territory of which it was once capital ("Ragau" in the Apocryphal Book of Judith). Ray, in an area of fertile lowland between the Zagros Mountains, the Elburz Mountains, and the great Dasht-e Kavir desert, commanded vital routes across and around the mountains, and was a key to power over the whole of Persia (Iran). The vast majority of ancient Persian literature has been lost, so little is known about the history of Ray before the arrival of Islam in the 7th century CE (although it is worth noting here that it was one of the great centres of the Zoroastrian religion).
Alexander the Great passed through Ray (then called Rhagae) in pursuit of Darayavahush (Darius) III, last of the Achaemenid dynasty of Persia, resting his exhausted troops there for five days when he heard that his quarry had already reached the Caspian Gates pass (the much later historical epic, Shah-nameh, suggests that the garrison at Ray elected to join Alexander, and aided his conquest of Persia). After the great conqueror's untimely death, Seleucus, a successful officer in his army, initially settled in Babylon as his share of the empire, embarked on a nine-year campaign of conquest in 311 BCE, ultimately acquiring most of Persia. He followed Alexander's policy of establishing Greek cities at key strategic points, and among these was Europos, a replacement for the old Rhagae (much needed because there was an earthquake around 300 BCE).
Around 250 BCE, during the reign of the third Seleucid emperor, Arsak (Arsaces) killed the viceroy of Parthia and temporarily set up headquarters at Ray (Rhages), founding the Arsacid dynasty. He was unable to hold the city, but his family remained in control of the territory further east. A later Arsacid ruler of Parthia, Phraates I subdued the Mardi people of the Elburz Mountains, nominally subjects of the Seleucids, shortly after his accession in 181 BCE. According to Strabo's Geography, he settled them at Charax, a fort between Ray (Rhagae) and the Caspian Gates pass, the main communication route with the east. Phraates' successor Mithridates I then expanded Parthia, his conquests including Ray. The town seems to have suffered, and he had it "refounded" around 148 BCE with the name Arsacia.