In 1159 Kilij Arslan attacked Byzantine emperor Manuel I Comnenus as he marched past Iconium (the capital of Rum) as Manuel returned from negotiating with Nur ad-Din in Syria. In 1161 Manuel's nephew John Contostephanus defeated Kilij Arslan, and the sultan travelled to Constantinople in a show of submission. In 1173 Kilij Arslan, now at peace with the Byzantines, allied with Nur ad-Din against Mosul.
The peace treaty with the Byzantines lasted until 1175, when Kilij Arslan refused to hand over to Manuel recently conquered territory from the Danishmends, although both sides had for some time been building up their fortifications and armies in preparation for a renewed war. Kilij Arslan tried to negotiate, but Manuel invaded the sultanate in 1176, intending to capture Iconium itself. Kilij Arslan was able to drive Manuel's army into a valley near Myriokephalon, and although Manuel's force was not totally annihilated, the sultan forced the emperor to dismantle his fortifications along the frontier.
In 1180 the sultan took advantage of the instability in the Byzantine Empire after Manuel's death to secure most of the southern coast of Anatolia, and allied with Saladin, Nur ad-Din's successor, that same year. In 1185 he made peace with Emperor Isaac II Angelus, but the next year he transferred power to his nine sons, who immediately fought each other for control. Despite Kilij Arslan's alliance with Saladin he was unable to stop the armies of the Third Crusade, but the remnants of the German army were in any case destroyed by the Turks after the death of Frederick Barbarossa.
Kilij Arslan died in 1192. He was succeeded by Kay Khosru I, although his other sons continued to fight for control of the other parts of the sultanate.