At the start of his reign (1740), Frederick launched an unprovoked attack on Austria, annexing the rich province of Silesia in order to improve Prussia's economic conditions. This attack was part of the larger War of the Austrian Succession, during which Frederick challenged Maria Theresa's right to inherit the Habsburg throne. The war dragged on until 1748, at which point Prussia retained Silesia and gained a new ally: Great Britain. This alliance brought Prussia into the Seven Years' War with England against France, Austria, and Russia. Frederick won a number of tactical victories, but his army was worn down by 1763, when Prussia and Russia agreed to a truce. In 1772, Frederick also agreed to the First Partition of Poland with Russia and Austria, acquiring a large portion of Poland and linking East and West Prussia. Frederick looked down upon the people of Poland as "uncivilized," imposing heavy taxes on the Polish nobility and encouraging German settlement in the region. 

Frederick took a different approach to absolutist rule, proclaiming that the sovereign is the first servant of the state who should use his power to transform and strengthen the state. He reformed the justice system, outlawing torture, creating a uniform criminal code, and even increasing freedom of the press. Protestantism remained the preferred religion, but Frederick was relatively tolerant of religious freedom, in part as a way to attract diverse skills sets that would improve the economy. He also sought to economically modernize Prussia by controlling grain prices, reforming the currency, raising protective tariffs (taxes on imports), and funding transportation projects like canals to promote trade.

Frederick also turned his attention to reforming administration of the state, reorganizing the government into separate ministries to delegate tasks. He was also interested in improving land use, draining swamps and opening new farmlands and introducing new crops like the turnip and potato to increase food supplies. Finally, Frederick was a large supporter of the arts and education. He commissioned numerous building projects in Berlin and reinstituted the Prussian Academy of Sciences, inviting intellectuals from across Europe.