In the spring of 1187, Saladin began to amass his forces for an invasion of Palestine. His goal was to capture Jerusalem. Fighters arrived to join his army from all over the Islamic world. In June 1187, his army of 12,000 professional soldiers and 30,000 volunteers marched into the Frankish territory. They pillaged every Frankish settlement that they encountered, and set fire to the crops.
In 1174, the imperial throne of the Kingdom of Jerusalem had gone to King Baldwin IV, a tragic figure who suffered from leprosy. Due to his debilitating disease, he could not do justice to his kingly responsibilities. He stayed on the throne of Jerusalem for eleven years, till his death in 1185. His sister Sibylla had married Guy de Lusignan, a foolish and overambitious adventurer from France, who became the next king of Jerusalem, only to lose the city in two years.
When Saladin’s army began its march from Egypt, Lusignan ordered a general call to arms. He managed to amass 1200 knights and between 15000 to 20000 soldiers.
Saladin’s plan was to lure Jerusalem’s forces into the open, in a battlefield of his choosing, and defeat them in a pitched battle. He implemented his strategy on 2 July 1187, in the weakly defended town of Tiberias. The small Christian army, which was guarding the town, was quickly vanquished, and Saladin’s forces poured into the town, but they did not capture the citadel in which Eschiva of Bureswife, wife of Raymond III, Count of Tripoli, had taken refuge. Saladin allowed Eschiva’s call for help to slip through his guards and reach the crusader camp. He was using her as bait to lure the crusaders into marching towards Tiberias.
Though his wife was trapped in Tiberias, Raymond insisted that a pitched battle with Saladin’s massive army would be suicidal for the crusaders. He believed that he could ransom his wife from Saladin. But Lusignan had no faith in Raymond. He thought that Raymond was advising inaction because he wanted to have him branded as a coward.
The enmity between Raymond and Lusignan went back to 1185, when Baldwin IV had died. Raymond had supported the claim of Sibylla’s sister Isabella and Isabella's husband, Humphrey IV of Toron, to the throne of the Kingdom of Jerusalem. A civil war between the factions led by the two sisters was averted when Isabella and her husband agreed to swear allegiance to Lusignan.
The Master of Knight Templars and a few other nobles urged Lusignan to ignore Raymond’s advice and move against Saladin. But the Knights Hospitaller was against provoking Saladin. Lusignan was persuaded by the advice of those who were favoring a direct attack.
On 3 July 1187, the crusader army marched towards Tiberias. A small contingent of knights was left behind to defend Jerusalem. When Saladin learned that the crusader army was on the move, he ordered his army to build a formation on the Galilean hills, from where they could dominate the battlefield. Saladin knew that access to water would play a role in the outcome of this battle. He ordered the wells in the region to be filled up. Only one source of water—the spring in the village of Hattin remained, but it was heavily guarded by Saladin’s soldiers.
It is unclear what Lusignan was thinking, or if he was thinking at all, as he marched his soldiers through the scorching desert landscape into the waterless kill zone that Saladin had established. Throughout the way, the natives demoralized the crusaders by beating drums, ululating, and singing. Hundreds were killed in the skirmishes between Saladin’s raiding parties and the flanks of the crusader army. If Lusignan had ordered a direct attack on the main body of Saladin’s forces, he might have had some chance of winning this battle. But his army was tired after the long march and, when it was late in the evening, he decided to pitch his camp in the waterless desert.
On the dawn of the coming day, the crusader army found that they were surrounded by the enemy. Saladin’s men lit dry scrub and the smoke went into the crusader camp blinding them. Around noon heavy bombardment with the arrows began—wave after wave of arrows descended into the crusader camp killing scores of soldiers and horses. Big gaps opened in the crusader army, and their formation was broken. Saladin’s army took advantage of the chaos in the crusader camp to lure several crusaders to their death. They would open gaps in their own formation. When the crusaders saw the gap in the enemy's side, they would rush into it hoping to escape from the kill zone, but they were encircled and slaughtered.
Lusignan made his last stand at Hattin, where there was the geographical feature of two hills which created the impression of horns rising from the ground. He could not defend his position and was overrun by Saladin’s men. Thousands of crusaders were killed, a few were taken captive. Lusignan was captured along with the Grand Master of the Templars, and Reynald of Châtillon. Saladin killed the last two with his own hands. His victory over the crusader army was decisive. On the Horns of Hattin, he constructed a triumphal arch, the ruins of which exist till this day.
On 2 October 1187, Saladin’s soldiers captured Jerusalem after a small siege. Those inside the city decided to accept the peace terms that he was offering, and most of them were allowed to leave the city after the payment of a small ransom. Having fulfilled his pledge of conquering Jerusalem, Saladin took the title of Sultan of Egypt and Syria.