The Khmer-Cham war begun by Cham king Jaya Indravarman IV continues, with neither side making serious gains until 1171, when the Chams, who had learned from a shipwrecked Chinese mandarin the battle advantages in using horses instead of elephants, gain an important victory over the Khmers.

The Greeks, resentful of the increasing presence in Constantinople of Venetian merchants and the privileges accorded them following the two Crusades, entreat the emperor to act against them.

Following an anti-Latin demonstration in Constantinople in 1171, the emperor, to maintain order in his dominions, and egged on by Genoa, Pisa, and other of the Venetians' trading rivals, in a single day arrests all Venetian residents in Constantinople and the provinces and briefly confiscates their goods.

Saladin, The founder of the staunchly Sunni Ayyubid Dynasty, converts Al-Azhar University to a Shafi'ite Sunni center of learning.

Abd-el-latif delivers lectures on Islamic medicine at Al-Azhar; Maimonides delivers lectures on medicine and astronomy.

Saladin obeys Nur ad-Din's order in 1171 to have the prayers in the mosques mention the Caliph of Baghdad instead of the Caliph of Cairo, who is now in his final illness.

Thus ends the weak and unpopular Shi'ite Fatimid caliphate and the great division in Levantine Islam from which the Latins had profited.

Saladin becomes Egypt's sole ruler, returning Egypt to official Sunni orthodoxy (despite the religious unorthodoxy of the Ismaili Fatimids, most of the dynasty’s subjects have remained orthodox Muslims).

Although non-Muslms are again subject to discrimination, Jewish intellectual life flourishes under Ayubbid rule with more than seven thousand Jewish families in Egypt, among them that of Maimonides, whose fame as a physician has spread rapidly; he soon becomes the court physician to Saladin.

Nur ad-Din Zengi, the Sultan of Syria, allows Turan-Shah to travel to Egypt in 1171 to join his younger brother Saladin at a time of rising tensions between Nur ad-Din and Saladin.

Nur al-Din empowers Turan-Shah to supervise Saladin, hoping to provoke dissension between the brothers.

However, this attempt fails as Turanshah is immediately granted an immense amount of lands by Saladin who is in the process of rebuilding the power structure of the Fatimid state around himself and his relatives.

The iqta' or "fief" given to Turan-shah comprises the major cities of Qus and Aswan in Upper Egypt as well as the Red Sea port of Aidab.

Turan-shah is the main force behind the suppression of a revolt staged in 1171 by the Black African garrisons of the Fatimid army in 1171.

Turan-Shah develops a close relationship with the poet courtier 'Umara, who had been a power player in Fatimid politics before Saladin's ascendancy to the vizierate in 1169.

The last Fatimid caliph al-Adid dies on September 11, 1171, and the Ayyubid dynasty gains official control of Egypt.

A number of accusations of murder against Turan-Shah arises following the caliph's death.

According to a eunuch in the service of al-Adid's widow, al-Adid died after hearing that Turan-Shah was in the palace looking for him.

In another version, Turan- Shah is said to have killed al-Adid himself after the latter refused to reveal the location of state treasures that were hidden in the palace.

After the caliph's death, Turan-Shah settles in Cairo in a quarter formerly occupied by Fatimid emirs.

Emperor Manuel, in prosecuting the war with Venice that began in 1170, seizes Venetian outposts in the Aegean: …

…other Venetian holdings in the Adriatic fall to Hungary's Stephen III, who advances with his troops along the Dalmatian coast.

The Venetians, who break relations with Constantinople in 1171, will not forget this episode.

They, too, begin to think in terms of putting Constantinople under Western control as the only means of securing their interest in Greek trade.

Bologna had begun in the eleventh century to aspire to being a free commune, which it had been able to do when Matilda of Tuscany died, in 1115, and the following year the city had obtained many judicial and economic concessions from Henry V. Bologna had joined the Lombard League against Frederick Barbarossa in 1164.

In one of the few instances of persecution of Italian Jews during this age, the city expels its Jews in 1171.