Islam
Sultan in Egypt
Saladin's position was by no means secure. The caliphate in Egypt was Shi'ite, whereas Saladin was Sunni. The local Fatimid forces were Egyptian and Arab, whereas Saladin's forces were Turkish, Kurdish, and some Syrians. To secure himself, he began granting estates to his own followers, but this only led to a revolt within the Egyptian army at Cairo. He was able to suppress this, but only after much bloodshed, and the refugees fled to Upper Egypt where they continued to foment revolts for some years.
The revolt did, however, open more opportunities for Saladin and his family. One of his uncles, Turan-Shah, was given Upper Egypt after the rebellion, to keep that region in line. Meanwhile, Saladin was assiduous in replacing Fatimid officials with his own, with an eye to ending the Fatimid dynasty completely. Their military force was spent and broken, so it was a matter of replacing the moral authority, and here the key was replacing Fatimid judges.
The change-over came in September 1171, when the old Caliph died. There was a Fatimid successor, but Saladin caused the name of Caliph al-Mustadi, the Abassid caliph in Baghdad, to be pronounced in the mosques. In medieval Islam, a caliph became caliph by the apparently simple act of being called "caliph" by the imams. Certain mosques had pre-eminent authority, so if a caliph was recognized there, then the rest of the mosques fell in line, unless they chose explicitly to dissent (that was easy to tell—they simply proclaimed someone else).
With the new caliph, now Saladin ruled as the representative of Nuradin, who recognized the Abassid caliph. He did not sit still. He sent Turan-Shah to Upper Egypt, where he was so successful he also invaded and conquered the Yemen. Saladin also made some moves eastward. These activites clearly made Nuradin nervous, for Saladin was quickly becoming powerful enough to challenge him. It may have been that the troops Nuradin mustered in the spring of 1174 were meant for an invasion of Egypt. We'll never know, for Nuradin died in May 1174. Saladin was now the most powerful man west of Baghdad.