Rostam was a member of the House of Ispahbudhan, one of the seven Parthian clans; his father was Farrukh Hormizd, the spahbed of Adurbadagan and Khorasan, who was the son of Vinduyih, who had served as the treasurer and minister during the early reign of Khosrau II (r. 591–628), until he was killed in 591 or 594/5 by the latter, who wanted free himself of his influence. Vistahm, who was the brother of Vinduyih and the spahbed of Khorasan, was also targeted by Khosrau II, but managed to escape to the east, where he started a revolt, which encompassed most of the empire, lasting from 590/1–596 or 594/5–600. Rostam had a brother named Farrukhzad, who was active in Ctesiphon and enjoyed a great status there, reportedly being a favourite of Khosrau II.
During the late phase of the Byzantine–Sasanian War of 602–628, Rostam and Farrukh Hormizd rebelled against Khosrau II in Adurbadagan, allowing the Byzantine emperor Heraclius to enter the province, where he sacked several cities, including the Adur Gushnasp temple.
In 628, the feudal families of Iran secretly mutinied against Khosrau II; Khosrau's son, Sheroe was shortly released by the feudal families, which included; the Ispahbudhan family represented by Farrukh Hormizd; a branch of the Mihran family represented by Shahrbaraz; the Armenian faction represented by Varaztirots II Bagratuni; and the Kanarangiyan family represented by Kanadbak. On February, Sheroe, together with Aspad Gushnasp, captured Ctesiphon and imprisoned Khosrau II. Sheroe then proclaimed himself as king of the empire on 25 February, assuming the dynastic name of "Kavadh II". Kavadh II thereafter ordered his vizier (wuzurg framadar) Piruz Khosrow to execute all his brothers and half-brothers, including Khosrau II's favorite son and heir Mardanshah. Three days later, Kavadh II ordered Mihr Hormozd to execute his father. With the agreement of the nobles of the Sasanian Empire, Kavadh II then made peace with Heraclius. He then took all the properties of Farrukhzad and put him under arrest in Estakhr.
Following the loss of territory required for the peace treaty, Farrukh Hormizd, along with Rostam and Farrukhzad, formed an independent state within the northern part of the Sasanian Empire, which became known as the Pahlav (Parthian) faction. Piruz Khosrow also formed an independent state in southern Iran, which become known as the Parsig (Persian) faction. This divided the resources of the country which resulted in a devastating plague in the western provinces of Iran, killing half of the population along with Kavadh II who was succeeded by his eight-year-old son Ardashir III.
During the reign of Azarmidokht, Farrukh Hormizd, in order to make a union with the Parsig faction, and legitimize his power, asked Azarmidokht to marry him. Not daring to refuse, Azarmidokht had him killed with the aid of the Mihranid noble Siyavakhsh, who was grandson of Bahram Chobin, the famous spahbed and briefly shahanshah. After the death of Farrukh Hormizd, Rostam became the new spahbed of Adurbadagan and Khorasan. Rostam, who was in Khorasan at the time of his father's death, marched to Ctesiphon and avenged his father by killing Azarmidokht. Rostam then restored Boran to the throne, who later made a meeting with the Pahlav and Parsig faction, where both factions agreed to work together. Piruz, however, later strangled Boran himself. This ended the Parsig-Pahlav collaboration and resumed their hostilities. Rostam and Piruz, were, however, threatened by their own men, and agreed to work together once again, and crowned Yazdegerd III, the grandson of Khosrau II, as the new king of the empire.
Throughout this period the great expansion of Arab-Muslim armies had slowly been penetrating the south-western frontiers under Caliph Umar ibn al-Khattāb. The Persians had repeatedly blocked this advance and in 634 the Caliph's army suffered a seemingly decisive defeat at the Battle of the Bridge. The Sasanian general Bahman Jaduya, though, was ordered back to Ctesiphon by Rostam in order to put down a revolt in his own capital city. Caliph `Umar's forces retreated, only to launch a successful assault three years later.
In 636, Yazdegerd III ordered Rostam Farrokhzad to subdue the Muslim Arabs invading Iran and then told him: "Today you are the [most prominent] man among the Iranians. You see that the people of Iran have not faced a situation like this since the family of Ardashir I assumed power."
Yazdegerd III then said: "the Arabs and their exploits since they have camped at Qadisiyyah and ... what the Iranians have suffered at their hands."
Rostam then replied by saying that the Arabs were "a pack of wolves, falling upon unsuspecting shepherds and annihilating them."
However, Yazdegerd III then argued with him and said: "It is not like that. I put the question to you in the expectation that you would describe them clearly and that then I would be able to reinforce you so that you might act according to the [real situation]. But you did not say the right thing." Yazdegerd III "then compared the Arabs to an eagle who looked upon a mountain where birds take shelter at night and stay in their nests at the foot of it. In the morning the birds recognized that the eagle is preying upon them. Whenever a bird became separated from the rest, the eagle snatched him. When the birds saw him [doing this], they did not take off out of fear ... If they had taken off all at once, they would have repelled him. The worst thing that could happen to them would be that all would escape save one. But if each group acted in turn and took off separately, they all perished. This was the similarity between them and the Iranians."
Rostam, however, did not agree with Yazdegerd III and then told him: "O king, let me [act in my own way]. The Arabs still dread the Iranians as long as you do not arouse them against me. It is to be hoped that my good fortune will last and that God will save us the trouble." Rostam then said: "We should employ the right ruse," he insisted. "In war, patience is superior to haste, and the order of the day is now patience. To fight one army after another is better than a single [and total] defeat and is also harder on our enemy." Yazdegerd III, however, was too young and stubborn to listen to Rostam.
Before the Muslim Arabs and the Sasanians engaged in battle, Rostam tried to negotiate with the Arabs. He therefore sent them a letter saying:
After having read the letter, the Arabs did as Rostam asked and sent a man named Zuhrah. However, the negotiations with him did not go well, which made Rostam ask for another messenger, and thus a man named Mughirah ibn Shubah was sent. Rostam then told Mughirah: "We are firmly established in the land, victorious over our enemies, and noble among nations. None of the kings has our power, honor, dominion." While Rostam was talking, Mughirah interrupted him and said: "If you need our protection, then be our slave, and pay the poll tax out of hand while being humiliated; otherwise it is the sword." Feeling greatly insulted and angered, Rostam threatened Mughirah and said: "Dawn will not break upon you tomorrow before I kill you all".
Rostam, while preparing to face the Arab army, wrote a letter to his brother Farrukhzad, telling him to gather an army and then go to Azerbaijan where he should pray for him. Rostam also reminded Farrukhzad that Yazdegerd III was the only legacy left from the Sasanians. Rostam then set out from Ctesiphon in command of a large Sasanian force to confront the Arab-Muslim army of Caliph `Umar ibn al-Khattāb on the western bank of the Euphrates River at the plains of al-Qādisiyyah, a now abandoned city in southern Mesopotamia, southwest of al-Hillah and al-Kūfah in Iraq.
During the final day of the battle, there was a heavy sandstorm facing the Sasanian army. Rostam used a camel loaded with weapons as shelter to avoid the sandstorm. Not knowing that Rostam was behind, Hilāl ibn `Ullafah accidentally cut the girdle of the load on the camel. The weapons fell on Rostam and broke his back leaving him half dead and paralyzed. Hilal beheaded Rostam and shouted "I swear to the god of Kaaba that I have killed Rostam." Shocked by the head of their legendary leader dangling before their eyes, the Sassanid soldiers were demoralized, and the commanders lost control of the army. Many Sassanid soldiers were slain in the chaos, with some escaping through the river, and finally the rest of the army surrendered.
The defeat of Rostam's army heavily demoralized people of the Sasanian Empire. Soon, after Rostam's death, many more Sasanian veterans were killed, which included: Piruz Khosrow, Shahrvaraz Jadhuyih, Mardanshah in 642, and Siyavakhsh and Muta of Dailam in 643. In 651, Yazdegerd III was murdered by Mahuy Suri, and the Arabs shortly conquered Khorasan after.
The Shahnameh describes him as: "A sagacious, warlike and one who had been a conqueror. He was a calculator of the stars, of great perception; and he listened deeply to what his counsellors advised."
Christensen describes him as: "A man endowed with extraordinary energy, a good administrator and a fine general."