November (or December) – Henry II of England, when word reaches him in France of Thomas Becket's latest actions, utters words that are interpreted by his followers as a wish for the archbishop's death.
December 29 – Thomas Becket, Archbishop of Canterbury, was assassinated in Canterbury Cathedral.
The Danes attack Estonia.
The city of Dublin is captured by the Normans.
The East Frisian island of Bant is broken up in a North Sea flood.
Palace guards massacre the civil officials at the Korean court and place a new king on the throne. The coup leaders abolish the privileges that have kept the aristocrats in power and appoint themselves to senior posts.
Earliest dating for the making of Cheddar cheese.
According to folklore, the Welsh prince Madoc sailes to North America in his ship the Gwennan Gorn and founds a colony.
Estimation: Fes in the Almohad Empire becomes the largest city of the world, taking the lead from Constantinople, capital of the Byzantine Empire.
Saladin abolishes the Fatimid Caliphate, restoring Sunni rule in Egypt.
Manuel I Comnenus orders all the Venetians in the Byzantine Empire to be arrested and their property confiscated.
Rhys ap Gruffydd agrees to negotiate with Henry II of England.
Construction of the Cathedral of San Sabino in Bari is completed.
Serbian ruler Stefan Nemanja begins his sole reign.
Alfonso II of Aragon conquers Caspe and Teruel.
Henry II of England invades Ireland with the aid of the ousted King of Leinster, Diarmait Mac Murchada (dies May 1). As is usual at this time, Henry commandeers merchant ships as part of his invasion. Henry claims the ports of Dublin, Waterford, and Wexford for himself and promises the Irish chieftains protection if they will acknowledge him as their overlord. This begins eight centuries of conflict between Ireland and England. Ascall mac Ragnaill, last Norse–Gaelic King of Dublin, is captured while trying to retake Dublin from the Cambro-Norman Richard de Clare (Strongbow), perhaps in company with Sweyn Asleifsson, and beheaded; before the end of the year, de Clare relinquishes possession of the city to his own liege lord, Henry. Ireland would be enslaved for the next 700 years.
Alliance of Pisa and Florence against Lucca and Genoa.
The successors of Robert Burdet leave Catalonia for Majorca, marking the end of the attempts to create a Norman principality in Iberia.
April/May – Béla returns to Hungary where he is acclaimed king.
Richard Lionheart becomes Duke of Aquitaine (later King Richard I of England).
Henry II of England and Humbert III, Count of Savoy agree to wed their respective heirs, John of England and Alicia. The alliance never occurs because Henry's elder heir, Henry the Young King, becomes jealous over the castles which the elder Henry promises to the couple and stages a rebellion which will take the elder Henry two years to put down. By that point, Alicia has died.
Alberto di Morra is sent by Pope Alexander III to the Council of Avranches, where Henry II of England is absolved of the sin of murder in the matter of the assassination of Thomas Becket.
The Synod of Cashel ends the Celtic Christian system and brings them under the Pope.
A Muslim rebellion is quelled at Prades, this event marks the end of the pacification of the lands recently conquered by the Catalans.
According to the annals of the Worcester Priory, "nothing memorable" happens in this year.
Asia
End of Qiandao era and start of Chunxi era of the Chinese Emperor Xiaozong of Song.
Saladin seizes Aden in Arabia.
Europe
January 5 – On the death of Bolesław IV the Curly, High Duke of Poland, he is succeeded by Mieszko III the Old, and as Duke of Sandomierz in Lesser Poland by Casimir II.
March - Henry the Young King withdraws to the French court, marking the beginning of the Revolt of 1173–74, in which Eleanor of Aquitaine and her sons rebel against her husband Henry II of England.
William de Braose, 3rd Lord of Bramber, becomes High Sheriff of Herefordshire in England.
Abergavenny Castle is seized by the Welsh.
Following the death of Kol Sverkerson, king Knut Eriksson extends his reign to also include Östergötland. He is now unopposed as king of Sweden.
The efforts of the Almohad caliph, Abu Yaqub Yusuf, to repopulate the western Andalusian city of Beja begin. They are rapidly abandoned, sign of the quick demographic weakening of the Muslim in the peninsula.
Arts and leisure
August 8 – The construction of a campanile which will become the Leaning Tower of Pisa begins.
Algebraic chess notation is first recorded.
Religion
February 21 – Canonisation of Thomas Becket; his tomb in Canterbury Cathedral becomes a shrine and popular pilgrimage destination.
Peter Waldo is converted to Christianity and founds the Waldensians.
Africa
Siculo-Norman troops launch a failed attack against Ayyubid-held Alexandria.
Europe
April 7 – Richard of Dover enthroned as Archbishop of Canterbury in England.
July 13 – Battle of Alnwick: William I of Scotland is captured by Ranulf de Glanvill after attacking England in support of the Revolt of 1173–1174 against King Henry II there and Henry occupies part of Scotland.
September 30 – Treaty of Montlouis: The Revolt of 1173–1174 by his sons against King Henry II of England ends peacefully.
December 8 – Treaty of Falaise signed between Henry II of England and William I of Scotland permits William's release in return for homage.
Henry II of England acknowledges Rosamund Clifford as his mistress.
Fire destroys most of Padua.
The city of Pombal, Portugal is founded by Gualdim Pais.
Battle of Thurles in Ireland: Donal Mór Ó Brian defeats a Norman incursion into Thomond.
Horse racing at Newmarket in England is first recorded.
Asia
Vietnam is given the official name of Annam by China.
= Western Asia =
July 11 – Baldwin IV, 13, becomes King of Jerusalem, with Raymond III of Tripoli as regent and William of Tyre as chancellor.
Saladin captures Damascus.
Central America
The last Toltec king commits suicide.
Asia
A Song Dynasty Chinese written record of this year states that a paper-printed-money factory in the city of Hangzhou alone employs a daily work force of more than 1,000.
Ly Cao Ton becomes ruler of Vietnam.
The Kingdom of Namayan reaches its peak on Luzon.
Europe
=British isles=
Henry II of England begins living openly with his friend Rosamund Clifford, raising suspicions about their relationship & alienating Henry's wife, Eleanor of Aquitaine
Treaty of Windsor: Ruaidrí Ua Conchobair (Rory O'Conner), the last High King of Ireland, submits to Henry II as vassal of Ireland.
The Massacre of Abergavenny ends with several Welsh noblemen dead at the orders of William de Braose.
Denmark
Vordingborg Castle is completed.
=Byzantium=
Byzantine Emperor Manuel Comnenus restores the trading privileges of Venice.
=Iberia=
Under the admirals of the clan Banu Mardanish, an Almohad fleet suffers a large defeat at the hand of the Portuguese, as they were trying to reconquer Lisbon.
Religion
The high academy of Bosnian religious organization in Moštre, Visoko, is first mentioned in Vatican archives.
William of Tyre becomes archbishop of Tyre.
January – The Assize of Northampton is enacted in England.
May 22 – The Hashshashin attempt to murder Saladin near Aleppo.
May 29 – Battle of Legnano: Frederick I, Holy Roman Emperor, is defeated by the Lombard League, leading to the pactum Anagninum (the Agreement of Anagni).
September 17 – Battle of Myriokephalon: The Seljuq Turks defeat the Byzantine Emperor Manuel I Komnenos.
Al-Adil I, the Muslim ruler of Egypt, suppresses a revolt by the Christian Copts in the city of Qift, hanging nearly 3,000 of them on the trees around the city.
Raynald of Châtillon is ransomed from prison in Aleppo.
Construction begins on a stone-built London Bridge.
The first recorded Welsh Eisteddfod is held by Rhys ap Gruffydd at Cardigan.
Unkei completes his Dainichi Nyorai (Enjō-ji) statue, now a National Treasure of Japan.
Sens Cathedral installs an horologe, presumed to be an early form of clock.
The Carthusians are approved as a religious order.
January – Eystein Meyla, leader of the Birkebeiner in Norway, is killed. Sverre Sigurdson (Later, King Sverre I, of Norway) becomes the new leader.
January 13 - Leopold V becomes Duke of Austria.
March – Treaty of Venice: Frederick I Barbarossa acknowledges Alexander III as Pope.
August 1 – Holy Roman Empire renounces any claims on the territory of Rome.
September 27 – Pope Alexander III sends a letter to Prester John, believing he is real.
November 25 – Battle of Montgisard: Baldwin IV of Jerusalem and Raynald of Chatillon defeat Saladin.
During the third year of the Angen era in Japan, a fire devastates Kyoto.
During the winter, the Estonians attack Pskov.
Casimir II overthrows his brother Mieszko III the Old to become High Duke of Poland.
The Cham sack the Khmer capital of Angkor Wat.
Moscow is burned down and its inhabitants are killed.
A civil war breaks out in the Republic of Florence between the Uberti family and their consular opponent.
Puigcerdà is founded by Alfonso II of Aragon.
Byland Abbey is established on its final site in Yorkshire, England, by the Cistercians.
Abbas Benedictus becomes abbot of Peterborough in England.
Roger de Moulins becomes Grand Master of the Knights Hospitaller.
Possible date – Richard FitzNeal begins to write his treatise Dialogus de Scaccario ("Dialogue concerning the Exchequer") in England.
Europe
July 17 – Provence: Saracen pirates, from the Balearic Islands, raid the benedictine monastery of Saint Honorat on the Lérins Islands and the city of Toulon killing an estimated 300 and taking captives. The surviving captives are free from the Balearic Islands in 1185.
George III of Georgia defeats a noble revolt and proclaims his daughter Tamar coregent.
The Portuguese troops conquer Beja from the Almohads.
Art and science
June 18 – Five Canterbury monks see what is possibly the Giordano Bruno crater being formed.
The Sung Document is written, detailing the discovery of "Mu-Lan-Pi" (suggested by some to be California) by Muslim sailors.
The Chronicle of Gervase of Canterbury is written.
The Leaning Tower of Pisa begins to lean as the third level is completed.
Middle East
23–30 August – Battle of Jacob's Ford , Syria
Saladin destroys the still in construction Castle of Chastellet at Jacob's Ford, killing 700 knights and taking 800 civilians captive.
America
The Maya city of Chichen Itza is sacked and burned by Hunac Ceel, the Mayapan king.
Europe
June 19 – Battle of Kalvskinnet (outside Nidaros, Norway): Earl Erling Skakke is killed, and the battle changes the tide of the civil wars.
Afonso I is recognized as King of Portugal by Pope Alexander III, bringing Portugal the protection of the Catholic Church against the Leonese monarchy.
November 1 – Philip II is crowned King of France. He assumes his office, however, in the next year, following the death of his father Louis VII.
The city of Aberdeen is chartered by William the Lion.
Large offensive by the Almohad army in southern Portugal aiming at the reconquest of the Alentejo. Further north, a fleet led by Abd Allah b. Ishaq b. Jami is sailing to attack Lisbon but is repelled by the Portuguese admiral D. Fuas Roupinho near the Cape Espichel. The Portuguese admiral later manages to enter in the harbor of Ceuta and destroy a number of Muslim ships. It is the beginning of a four-year naval conflict between Almohads and Portuguese.
Religion
The Third Council of the Lateran condemns Waldensians and Cathars as heretics, institutes a reformation of clerical life, and creates the first "ghettos" for Jews. It also rules that the Pope must receive 2/3 of the cardinals' votes to be elected.
Westminster School is founded by the monks of Westminster Abbey (by papal command) in England.
The Drigung Kagyu school of Kagyu Buddhism is founded.
