President Ayub ruled Pakistan almost absolutely for a little more than ten years. Although his regime made some notable achievements, it did not eliminate the basic problems of Pakistani society. Ayub's regime increased developmental funds to East Pakistan more than threefold. This had a noticeable effect on the economy of the province, but the disparity between the two wings of Pakistan was not eliminated. His regime also initiated land reforms designed to reduce the political power of the landed aristocracy. Ayub also promulgated a progressive Islamic law, the Muslim Family Laws Ordinance of 1961, imposing restrictions on polygamy and divorce and reinforcing the inheritance rights of women and minors.

In 1959, soon after taking office, Ayub ordered the planning and construction of a new national capital, to replace Karachi. The chosen location of the new capital in the province of Punjab was close to the military headquarters of Rawalpindi, which served as an interim capital. Islamabad officially became the new capital in 1967, although construction continued into the 1970s.

Perhaps the most pervasive of Ayub's changes was his introduction of a new political system, known as the Basic Democracies, in 1959. It created a four-tiered system of mostly indirect representation in government, from the local to the national level, allowing communication between local communities and the highly centralized national government. Each tier was assigned certain responsibilities in local administration of agricultural and community development, such as maintenance of elementary schools, public roads, and bridges. All the councils at the tehsil (subdistrict), zilla (district), and division levels were indirectly elected. The lowest tier, on the village level, consisted of union councils. Members of the union councils were known as Basic Democrats and were the only members of any tier who were directly elected.

A new constitution promulgated by Ayub in 1962 ended the period of martial law. The new, 156-member National Assembly was elected that year by an electoral college of 120,000 Basic Democrats from the union councils. After the legislative elections political parties were again legalized. Ayub created the Pakistan Muslim League (PML) as the official government party. The presidential election of January 1965, also determined by electoral college rather than direct vote, resulted in a victory for Ayub, although opposition parties were allowed to participate.

Ayub was skillful in maintaining cordial relations with the United States, stimulating substantial economic and military aid to Pakistan. This relationship deteriorated in 1965, when another war with India broke out over Kashmir. The United States then suspended military and economic aid to both countries. The USSR intervened to mediate the conflict, inviting Ayub and Prime Minister Lal Bahadur Shastri of India to meet in Toshkent (Tashkent). By the terms of the so-called Toshkent Agreement of January 1966, the two countries withdrew their forces to prewar positions and restored diplomatic, economic, and trade relations. Exchange programs were initiated, and the flow of capital goods to Pakistan increased greatly.

The Toshkent Agreement and the Kashmir war, however, generated frustration among the people and resentment against President Ayub. Foreign Minister Zulfikar Ali Bhutto, who opposed Pakistan's capitulation, resigned his position and founded the Pakistan People's Party (PPP) in opposition to the Ayub regime. Ayub tried unsuccessfully to make amends, and amid mounting public protests he declared martial law and resigned in March 1969. Instead of transferring power to the speaker of the National Assembly, as the constitution dictated, he handed it over to the commander in chief of the army, General Agha Muhammad Yahya Khan, who was the designated martial-law administrator. Yahya then assumed the presidency.