Il-Arslan had in 1152 been made governor of Jand, an outpost on the Syr Darya which had recently been reconquered, by his father, the Shah of Khwarezm.
When Atsïz died in 1156, Il-Arslan had succeeded him as Khwarazm-Shah.
Like his father, he was tributary to both the Seljuq sultan Sanjar and the Kara-Khitai gurkhan.
Il-Arslan had become involved in 1158 in the affairs of another Kara-Khitai vassal state, the Kara-Khanids of Samarkand.
The Karakhanid Chaghrï Khan had been persecuting the Karluks in his realm, and several Karluk leaders had fled to Khwarezm and sought Il-Arslan's help.
He responded by invading the Kara-Khanid dominions, taking Bukhara and besieging Samarkand, where Chaghrï Khan had taken refuge.
The latter appealed to both the Turks of the Syr Darya and the Qara Khitai, and the gurkhan sends an army, but its commander hesitates to enter into conflict with the Khwarazmis.
In the end, a peace is mediated in which Chaghrï Khan is forced to take back the Karluk leaders and restore them to their former positions.
Sanjar had died only a few months after Il-Arslan's ascension, causing Seljuq Khurasan to descend into chaos and allowing Il-Arslan to effectively break off Seljuq suzerainty, although he had remained on friendly terms with Sanjar's successor, Mas'ud.
They are alleged to have attempted to create a joint campaign against the Kara-Khitai, but such an alliance never occurred.
Like his father, Il-Arslan seeks to expand his influence in Khurasan, and in the 1160s had taken an active interest in the area by supplying armies to local allies, but despite the collapse of central Seljuq authority in that area, he had been unable to make any significant headway against the regional rulers.
The Kara-Khitai launch a punitive expedition in 1172 against Il-Arslan, who has not paid the required annual tribute.
The shah collects his army but soon becomes sick and turns over his forces to one of his lieutenants.
The Khwarezmi army is defeated, however, and Il-Arslan dies shortly after.
Following his death, the state briefly becomes embroiled in turmoil, as the succession is disputed between his sons Ala ad-Din Tekish and Sultan Shah.
Sultan Shah is the younger son, but he is considered the formal heir and his mother, Terken Khatun, places him on the throne.
The elder son, Ala ad-Din Tekish, flees to the Kara-Khitai and asks for them to enthrone him in place of his brother, promising an annual tribute in exchange.
He is given a large army, and he soon sets off for Khwarezm.
Sultan Shah and his mother, upon hearing of Tekish's approach, decide to flee, and Tekish installs himself in Khwarazm unopposed in December 1172.