Reign
The early years of Arshak's reign were peaceful. According to the Buzandaran Patmutʻiwnkʻ, Arshak undertook the "ordering of the realm" and brought the Armenian magnates under his control. At the same time, a series of reforms was initiated by Catholicos Nerses I, Arshak's cousin, who became patriarch in 353. Arshak preferred to rule from his royal encampment rather than from the capital Dvin. There are differences in the sources regarding the nature of Arshak II's foreign policy. The Roman historian Ammianus Marcellinus describes Arshak II as a "steadfast and faithful friend" to the Roman Empire. In the Buzandaran Patmutʻiwnkʻ, on the other hand, Arshak is depicted as vacillating between the Romans and Persians. Arshak seems to have attempted to balance Armenia's relations with the Roman and Sassanid empires. He may have adopted a neutral position early in his reign, followed by a possible reconciliation with Persia, and then an abrupt pivot towards Rome in 358 because of the emperor Constantius II's concessions. In 358, at Constantius II's suggestion, Arshak II married the Greek noblewoman Olympias, daughter of the late consul Ablabius. Constantius also granted Arshak exemption from taxation. Additionally, the Roman emperor allowed the return of Armenian hostages, including the king's nephews Gnel and Tirit.
According to Nina Garsoïan, Arshak II, like his father, pursued a policy strongly in favor of Arianism, which led to a falling out with Catholicos Nerses. Nerses was eventually exiled for around nine years along with other anti-Arian bishops and replaced during that time by a royal appointee called Chunak. Arshak's relations with the Armenian nobility also soured, leading him to order the assassinations of prominent , the extermination of several noble houses (such as the Kamsarakans) and the confiscation of their lands. In 359, Arshak ordered the murder of his nephews Gnel (in defiance of the intercession of Nerses) and Tirit. Although the Buzandaran Patmutʻiwnkʻ presents this as a story of romance and jealousy involving Parandzem, Gnel's wife whom Arshak later married, it is more likely that Arshak ordered the murders because his nephews, as Arsacid princes and potential pretenders, could have become rallying points for a rebellion against him. He attempted to shore up his rule by founding the city of Arshakavan in Kogovit, which, according to the Buzandaran Patmutʻiwnkʻ and Movses Khorenatsi, he populated by granting amnesty to any criminals that would settle there, as well as debtors, slaves, and others. Suren Yeremian and other historians have suggested that it is likely that Arshakavan was populated mainly by unfree peasants fleeing their masters, who were then given certain privileges. Arshak's plan was opposed by the clergy and nobility, who destroyed the city and killed its inhabitants.
Arshak was summoned by Constantius II to Caeserea in 360 and warned to remain loyal to Rome, after which, per Ammianus Marcellinus, the Armenian king "never dared to violate any of his promises." According to the Buzandaran Patmutʻiwnkʻ, Arshak enjoyed good relations with Shapur II for some time and even sent a detachment to help Shapur against the Romans at one point, but that hostilities began between Armenia and Persia due to the scheming of Arshak's father-in-law through Parandzem, Andovk Siuni, and the Persian-backed revolt of Meruzhan Artsruni. In 363, the Romans and Sasanian empires clashed again, and Arshak raided Persian territory in support of Emperor Julian's campaign. The campaign ended with Julian's death, and the new Roman emperor Jovian was forced to negotiate an undesirable peace with Shapur II in which, among other concessions, Rome renounced its alliance with Armenia, leaving the country to face Shapur alone. The Armenian chief general () Vasak Mamikonian successfully defended the central province of Ayrarat and won a number of victories over Persian armies, which were joined by Armenian forces led by Meruzhan Artsruni and Vahan Mamikonian, brother of Vasak. Nevertheless, more and more Armenian nakharars went over to the Persian side. Faced with this desperate situation, Arshak agreed to go to Persia for peace negotiations with Shapur after receiving guarantees for his safety. When Arshak II arrived with Vasak Mamikonian, he was imprisoned and possibly blinded, while his general was skinned alive.
After eliminating Arshak, Shapur laid waste to Armenia, destroying its major cities and deporting their inhabitants to Persia. Meruzhan Artsruni and Vahan Mamikonian, who had renounced Christianity, were installed as governors. Christian Armenians were persecuted and many churches were destroyed and replaced with Zoroastrian fire temples. Arshak's queen Parandzem and his son Pap continued to hold out in the fortress of Artagers for some time, perhaps until early 370, when the fortress was captured and Parandzem was taken to Persia to be put to death. Pap, however, had earlier managed to escape to Roman territory, and returned to Armenia to take the throne with the help of the emperor Valens in 370/371 (another estimate place Pap's ascension to the throne in 367/368).