Following his victory at Arsuf, Richard took Jaffa and established his new headquarters there. In November 1191 the Crusader army advanced inland towards Jerusalem. The poor weather, combined with the fear that if it besieged Jerusalem the Crusader army might be trapped by a relieving force, caused the decision to retreat back to the coast to be made.

In July 1192, Saladin's army suddenly attacked and captured Jaffa with thousands of men, but Saladin lost control of his army due to their anger for the massacre at Acre.

Richard subsequently gathered a small army, including a large contingent of Italian sailors, and hurried south. Richard's forces stormed Jaffa from their ships and the Ayyubids, who had been unprepared for a naval attack, were driven from the city. Richard freed those of the Crusader garrison who had been made prisoner, and these troops helped to reinforce the numbers of his army. Saladin's army still had numerical superiority, however, and they counter-attacked. Saladin intended a stealthy surprise attack at dawn, but his forces were discovered; he proceeded with his attack, but his men were lightly armoured and lost 700 men killed due to the missiles of the large numbers of Crusader crossbowmen. The battle to retake Jaffa ended in complete failure for Saladin, who was forced to retreat. This battle greatly strengthened the position of the coastal Crusader states.

Saladin was forced to finalize a treaty with Richard providing that Jerusalem would remain under Muslim control, while allowing unarmed Christian pilgrims and traders to visit the city. Ascalon, with its defences demolished, be returned to Saladin's control. Richard departed the Holy Land on 9 October 1192.