In keeping with Roman tradition, Augustus utilized the positions of the cursus honorum to favor members of his own family. Through adoption and marriage Augustus sought to establish a pool of potential heirs by placing various family members in positions of authority. In doing this, Augustus helped preserve the dynasty just as it was beginning.
As it turned out, he clearly identified several choices throughout his reign and his foresight in favoring multiple candidates at once assured that a 'Caesar' would eventually succeed him. The first among these candidates was his nephew Marcellus. The son of his sister Octavia was brought into political life in much the same manner as Augustus himself was by Julius Caesar, participating as a key player in Augustus' triumphs of 29 BC. He was allowed to hold offices far before the required ages, and in 25 BC was married to Augustus' 14-year-old daughter, Julia, to cement the relationship.
In 23 BC, however, Augustus fell terribly ill, and he wisely looked beyond his 19-year-old nephew for stability of the state. His signet ring was passed to his old friend and legionary commander, Marcus Vipsanius Agrippa. Agrippa had already been married to Augustus' niece Marcella and his status as a trusted friend and respected member of Roman society was the logical choice in the case of possible tragedy. As it turned out, Augustus recovered from his illness, but his first dynastic choice, Marcellus, died in the same year (23 BC) from an illness of his own. Agrippa was soon married to the widowed Julia (who turned out later to be a horrible embarrassment to Augustus due to marital infidelity), and he was sent east to act as Augustus' agent.
There has been some speculation that Agrippa was sent east due to a falling out between the two, but the evidence suggests that this couldn't be farther from the truth. Along with being granted pro-consular imperium while away, he was also granted tribunician power in 18 BC. Agrippa's marriage with Julia also proved to be of great benefit to the dynastic line, at least temporarily. Agrippa and Julia had 3 sons, Gaius, Lucius and Postumus (so named because he was born after his father's death) and 2 daughters. The first two sons (Augustus' blood grandchildren) were adopted as and were propped up as his heirs.
The situation was ideal for the time being. Augustus' old friend Agrippa would be in position to take over for Augustus, while both men could groom the directly related Gaius and Lucius for continuing the Principate, but fate intervened early with this plan. In 12 BC Agrippa died while on campaign in Pannonia and the order of succession was left in doubt again. At this time while Gaius and Lucius (8 and 5 years old respectively) were still in line for succession, the empire could not be left without a qualified heir to take over immediately. To fill the gap the sons of his wife Livia, Tiberius and Drusus, who had been advanced under Augustus already, now stood as Augustus' oldest and most viable male heirs.
Tiberius was married to Julia (her 3rd stint as wife to Augustus' heir) though the marriage was largely a sham. Tiberius married her out of duty, but in so doing divorced his first wife Agrippina (daughter of Agrippa) and the matter seemingly created a rift. The marriage with Julia was loveless and childless and Julia's reputation as an adulterer would eventually grow to near epidemic proportions. Initially, however, Tiberius, along with his brother Drusus, was sent to the Alps, Germania and Pannonia to expand Rome's interest there and the situation was relaxed by Tiberius' absence. Unfortunately, in a series of untimely deaths, Drusus Claudius Nero died while on campaign in Germania in 9 BC, and Tiberius was left as the only male heir of age. While Drusus' children with Antonia (daughter of Augustus' sister Octavia and Marcus Antonius) would go on to play important roles farther down the dynastic line, succession matters would continue to be complicated.
By 6 BC, Tiberius was back in Rome, and was granted Tribunician powers much like Agrippa was before him. Also like Agrippa, Tiberius was being sent to the east to act as Augustus direct agent, but matters not completely understood intervened. Rather than continue as Augustus heir, Tiberius retired to self-imposed exile on the island of Rhodes. While the reasons are not entirely known, its speculated that several factors were involved. His marriage to Julia was obviously a source of discontent. Augustus' rather obvious insistence that Gaius and Lucius Caesar would eventually succeed Tiberius (despite Tiberius having his own son by name of Drusus) seemingly played a role. Additionally, all the while Tiberius' mother Livia may have been scheming to advance her own line in Augustus' plans.
Despite Augustus' anger, Tiberius remained out of public life for several years while the favored heirs Gaius and Lucius Caesar were advanced. Before long however, Julia's behavior finally caught up to the emperor. In 2 BC, she was accused of conducting an orgy in the Roman Forum, though to this point he was apparently in the dark about her alleged infidelities. While this case may be a later addition to hype her misdeeds, there was no doubt as to her various affairs. Whether she behaved as such due to selfish pleasurable indulgence or as a means to political intrigue of her own (and her partners), her father had little choice but to make an example of such scandalous behavior. To preserve his own honor, Augustus exiled her to the island of Pantederia and several others were executed for involvement with her. Among these was Jullus, the son of Marcus Antonius, who had been previously spared by the victorious Octavian in the civil wars. Tiberius' behavior in response is confusing. In 2 AD, he returned to Rome as a private citizen leaving the impression that Julia truly was the source of the problem between he and Augustus. After Augustus' death, however, Tiberius allowed his ex-wife to return to the Italian mainland and live in more comfort, though she never would see Rome again. Perhaps political machinations were more at the heart of Tiberius' self-imposed exile in the first place. Regardless, events were about to unfold that would force him back into political life.
In 2 AD, Gaius and Lucius Caesar, then of age for political service, met tragedies of their own that shook the very core of the imperial dynasty. Lucius, at 19 years old, apparently drowned in Massilia while en route to campaign in Hispania, leaving Gaius as Augustus only heir. Gaius, also in 2 AD and at 22 years old, received a wound while campaigning in Armenia that he would eventually succumb to in 4 AD. Tiberius was left with little choice but to return to public life, and was adopted by Augustus. Postumus Agrippa was also adopted at this point, but for reasons that are not entirely clear (perhaps mental instability, or the political scheming of Livia) he faced exile in 6 or 7 AD. Likely to prevent possible issues of succession (as Postumus was Augustus' blood grandchild) he was executed shortly after Augustus death in 14 AD.
After the deaths of Gaius and Lucius, and the exile of Postumus, Tiberius was left without a doubt as the only heir of Augustus. From that point on, the powers of Augustus were gradually bestowed upon Tiberius and his official role as heir turned into a near official role as co-emperor. Augustus still had the last word in the succession of the principate, however. Tiberius was forced to adopt his nephew Germanicus (son of Tiberius' deceased brother Drusus and Antonia, Augustus niece through Octavia and Marc Antony) despite having a son of his own. In this way, Augustus assured that his own direct bloodline would eventually rule the Roman world. While Germanicus would prove his own worth and capabilities in years to come, the son who succeeded Tiberius, Gaius (Caligula), would put a permanent stain on the Julio- Claudian dynasty.