The seat of power of the small kingdom was first located at Arimaddana, Thiri Pyissaya, and Tampawaddy until 849 CE when it was moved to Pagan (Bagan).

The expansion accelerated in the 1050s and 1060s when King Anawrahta founded the Pagan Empire, the first ever unification of the Irrawaddy valley and its periphery.

One of the earliest chronicles, Yazawin Kyaw compiled in 1520, states that the kingdom of Pagan was founded in 156 CE by King Pyusawhti.

[1] The 19th century chronicle Hmannan Yazawin went further, asserting that the founders of the Pagan dynasty ultimate trace their origins back to the clan of the Buddha.

[2] Still according to the standard chronicles, Thamoddarit fixed the capital at Arimaddana-pura (အရိမဒ္ဒနာပူရ), ("the City that Tramples on Enemies"), near present-day Nyaung U, and named his kingdom Pugarama.

The 19 villages were: (1) Nyaung U, (2) Naga Soe, (3) Naga Kyit, (4) Magyi Kyi, (5) Htude, (6) Kyauk Zaga, (7) Ohte Thein, (8) Nyaungwun, (9) Anuradha, (10) Dazaungkun, (11) Ywa Mohn, (12) Kyinlo, (13) Kokko, (14) Taungpa, (15) Myegedwin, (16) Thayet Ya, (17) Singu, (18) Yonlut, and (19) Ywa Zaik.

Thamoddarit then appointed Pyusawhti, the founder of Pagan according to Yazawin Kyaw, as heir apparent for the commoner's bravery in defeating enemies of the state.

[5] The chronicles continue that King Thili Kyaung I (r. 344–387) moved the palace to Thiri Pyissaya, not far from the Pugama site.

The Pyusawhti line was restored when King Tharamon Phya, a grandson of Thihtan, was put in power by the court.

A descendant of Pyusawhti, Kunhsaw Kyaunghpyu restored the old royal line in 1001 but 20 years later, he was pushed out by the sons of Nyaung-u Sawrahan.

[7] Modern scholarship, however, holds that the Pagan dynasty was founded by the Mranma (Burmans) of the Nanzhao Kingdom in the mid-to-late 9th century CE; that the earlier parts of the chronicle are the histories and legends of the Pyu people, the earliest inhabitants of Burma of whom records are extant; and that Pagan kings had incorporated the Pyu histories and legends as their own.

(Archaeological evidence shows that as early as the 2nd century BCE, the Pyu had built water-management systems along secondary streams in central and northern parts of the Irrawaddy basin and had founded one of Southeast Asia's earliest urban centres.

Luce's reconstruction, the millennium-old Pyu realm came crashing down under repeated attacks by the Nanzhao Kingdom of Yunnan between the 750s and 830s CE.

[24] Thant Myint-U summarises the mainstream opinion that "the Nanzhao Empire had washed up on the banks of the Irrawaddy, and would find a new life, fused with an existing and ancient culture, to produce one of the most impressive little kingdoms of the medieval world.

Radiocarbon dating shows that human activity existed until c. 870 at Halin, the Pyu city reportedly destroyed by an 832 Nanzhao raid.

By the mid-10th century, Burmans at Pagan had expanded irrigation-based cultivation while borrowing extensively from the Pyus' predominantly Buddhist culture.

[Note 5] By Anawrahta's accession in 1044, Pagan had grown into a small principality—about 320 km (200 miles) north to south and about 130 km (80 miles) from east to west, comprising roughly the present districts of Mandalay, Meiktila, Myingyan, Kyaukse, Yamethin, Magwe, Sagaing, and the riverine portions of Minbu and Pakkoku.