In 404 BC, the Peloponnesian War ended with the victory of Sparta over Athens. The Spartans thought that they were now the sole superpower of the Greek world. But the Greek city-states, which had fought the war alongside Sparta, saw the political situation differently. They surmised that with the powerful Athenian navy destroyed, they no longer needed Sparta’s protection. They could chart their own policy. There was no reason for them to adhere to Spartan policy. Thus, the situation in the Greek world became much more chaotic.
Meanwhile tensions erupted between the Spartans and the Persian Empire. During the Peloponnesian War, the Spartans had sought the help of the Persians for defeating the Athenians. The Persians were led to believe that in exchange for their help, they would get control of the Greek states in Asia (Ionian cities). But after the Peloponnesian War, the Spartans refused to surrender the Ionian cities to the Persians. To make matters worse, in 401 BC, they backed Cyrus the Younger, son of Darius II, in his abortive coup to capture the Persian throne from his elder brother, Emperor Artaxerxes II.
Artaxerxes II crushed the coup and had Cyrus the Younger executed. Having saved his throne, Artaxerxes II turned his attention towards the former ally that had betrayed him, Sparta. A war broke out between the Persians and the Spartans in 401 BC. Artaxerxes II made a surprising diplomatic move in 396 BC. He entered into an alliance with the defeated side of the Peloponnesian War, the Athenians. Three other Greek city-states, Thebes, Corinth, and Argos, joined the Athenian and Persian side. The Corinthian War was now on. This war would last for twelve years: 395-387 BC.
The Corinthian War ended with a peace treaty imposed by Artaxerxes II. Under the peace treaty, Athenian democracy was restored, the Ionian cities were handed over to the Persians, and the Spartans agreed to play a lesser role in Greek politics.