It was long thought that Avestan represented "Old Bactrian", but this notion had "rightly fallen into discredit by the end of the 19th century".
[5] Bactrian, which was written predominantly in an alphabet based on the Greek script, was known natively as αριαο [arjaː] ("Arya"; an endonym common amongst Indo-Iranian peoples).
When texts in two extinct and previously unknown Indo-European languages were discovered in the Tarim Basin of China, during the early 20th century, they were linked circumstantially to Tokharistan, and Bactrian was sometimes referred to as "Eteo-Tocharian" (i.e. "true" or "original" Tocharian).
Following the conquest of Bactria by Alexander the Great in 323 BC, for about two centuries Greek was the administrative language of his Hellenistic successors, that is, the Seleucid and the Greco-Bactrian kingdoms.
In the 3rd century, the Kushan territories west of the Indus River fell to the Sasanians, and Bactrian began to be influenced by Middle Persian.
The Hephthalite period is marked by linguistic diversity; in addition to Bactrian, Middle Persian, Indo-Aryan and Latin vocabulary is also attested.
Sites at which Bactrian language inscriptions have been found are (in north–south order) Afrasiyab in Uzbekistan; Kara-Tepe, Airtam, Delbarjin, Balkh, Kunduz, Baglan, Ratabak/Surkh Kotal, Oruzgan, Kabul, Dasht-e Navur, Ghazni, Jagatu in Afghanistan; and Islamabad, Shatial Bridge and Tochi Valley in Pakistan.
[15] Of eight known manuscript fragments in Greco-Bactrian script, one is from Lou-lan and seven from Toyoq, where they were discovered by the second and third Turpan expeditions under Albert von Le Coq.
A major difficulty in determining Bactrian phonology is that affricates and voiced stops were not consistently distinguished from the corresponding fricatives in the Greek script.
By contrast, long /eː/, /oː/ are well established as reflexes of Proto-Iranian diphthongs and certain vowel-semivowel sequences: η < *ai, *aya, *iya; ω < *au, *awa.
The Proto-Iranian syllabic rhotic *r̥ is lost in Bactrian, and is reflected as ορ adjacent to labial consonants, ιρ elsewhere; this agrees with the development in the western Iranian languages Parthian and Middle Persian.