Theodosius was the son of one of Emperor Valentinian I's generals who probably secured for a twenty-something Theodosius the position of dux Moesiae (Ammianus Marcellinus 29.6.15). Dux (from which, 'duke') Theodosius defeated the Sarmatians in 374. Two years later his father was executed. Theodosius cautiously retired from public life to his home in Spain, emerging from it, according to a fifth century ecclesiastical historian, Theodoret of Cyrrhus, when Emperor Gratian summoned him to deal with a Balkan emergency -- the aftermath of Valens' defeat at Adrianople in August 378.
Michael Kulikowski, author of the information-loaded Rome's Gothic Wars, and the source for this article, says Gratian may not actually have been responsible for Theodosius' elevation to the imperial purple. The troops may have elevated their leader, instead, in a bloodless coup, making Theodosius emperor on January 19, 379. Regardless of how Theodosius came to power, Gratian accepted him, allotting him the governing of the Balkan mess. If Theodosius couldn't fix it, the failure would rest on his hands, not Gratian's.
Almost two years after his elevation, Theodosius was finally able to enter Constantinople, which he turned into the capital of the East. During the intervening period, Theodosius tried to recruit new forces to make up for the 16 units permanently lost at Adrianople. He had trouble and wound up recruiting farmers. Gratian offered no help. Cutting his losses Theodosius decided to come to peace terms with the Goths on October 3, 382. He gave land to the Goths, and Gothic soldiers, many of whom had been among the victors at Adrianople, joined the Theodosius' imperial forces. This meant that Gothic aristocrats, who no longer had their ancestral sources of power, could instead have careers in the imperial army. Those Gothic tribal kings who had been causing so much trouble for Valens and then Theodosius disappear from the historical record at this point.
For more on Theodosius' imperial career, see Theodosius I.
