Historical Accuracy
It is true that Baldwin IV, King of Jerusalem from 1174-1185, was a leper, and that his sister Sibylla was married to Guy of Lusignan. Also, Baldwin IV had a falling out with Guy before his death, and so Guy did not succeed Baldwin IV immediately. Baldwin crowned Sibylla's son from her previous marriage to William of Montferrat, five-year-old Baldwin V co-king in his own lifetime, in 1183. The little boy reigned as sole king for one year, dying in 1186 at nine years of age. After her son's death, Sibylla and Guy (to whom she was devoted) garrisoned the city, and she claimed the throne. The coronation scene in the movie was, in real life, more of a shock: Sibylla had been forced to promise to divorce Guy before becoming queen, with the assurance that she would be permitted to pick her own consort. After being crowned by Patriarch Heraclius of Jerusalem (who is unnamed in the movie), she chose to crown Guy as her consort. Raymond III of Tripoli, the film's Tiberias, was not present, but was in Nablus attempting a coup, with Balian of Ibelin, to raise her half-sister (Balian's stepdaughter), princess Isabella of Jerusalem, to the throne. However, Isabella's husband, Humphrey IV of Toron, betrayed them by swearing allegiance to Guy.
Raymond of Tripoli was a cousin of Amalric I of Jerusalem, and one of the Kingdom's most powerful nobles, as well as sometime regent. He had a claim to the throne himself, but, being childless, instead tried to advance his allies the Ibelin family. He was often in conflict with Guy and Reynald, who had risen to their positions by marrying wealthy heiresses and through the king's favour. Guy and Reynald did harass Saladin's caravans, although the claim that Reynald captured Saladin's sister is based on a conflation of two separate facts: after Reynald's attack on one caravan, Saladin made sure that the next one, in which his sister was travelling, was properly guarded: the lady came to no harm.
The discord between the rival factions in the kingdom gave Saladin the opportunity to pursue his long-term goal of conquering it. The kingdom's army was defeated at the Battle of Hattin, partly due to the conflict between Guy and Raymond. As already stated, the battle itself is not shown in the movie, but its aftermath is depicted. Guy and Reynald were captured, and according to al-Safadi in al-Wafi bi'l-wafayat, Reynald was executed after drinking from the goblet offered to Guy, as the sultan had once made a promise never to give anything to Raynald. Guy was imprisoned but later freed. He attempted to retain the kingship even after the deaths of Sibylla and their daughters during his siege of Acre in 1190, but was defeated by Conrad of Montferrat in an election in 1192. Richard I of England, his only supporter, sold him the lordship of Cyprus, where he died c. 1194.
There was a Haute Cour, a "high court", a sort of medieval parliament, in which Jeremy Irons's character Tiberias is seen arguing with Guy for or against war, in front of Baldwin IV as the final judge.
The movie alludes to the Battle of Montgisard in 1177, in which 16-year-old Baldwin IV defeated Saladin, with Saladin narrowly escaping.
The Knights Hospitaller and Knights Templar were the most enthusiastic about fighting Saladin and the Muslims. They were monastic military orders, committed to celibacy. Neither Guy nor Raynald was a Templar, as the movie implies by costuming them both in Templar surcoats: they were secular nobles with wives and families.
During one scene in the movie, shortly before Hattin, Balian is attacked by three soldiers referred to as "Templars". However, they clearly wear the white surcoats with black crosses of Teutonic Knights, rather than the white and red of the Knights Templar. The Teutonic Knights were not founded until 1190, three years after Hattin.
The historical original of Orlando Bloom's character, Balian of Ibelin, was a close ally of Raymond. However, he was a mature gentleman, just a year or two younger than Raymond, and one of the most important nobles in the kingdom, not a French blacksmith. His father Barisan (which was originally his own name, modified into French as 'Balian') was the founder of the Ibelin family in the east, and probably came from Italy. Balian and Sibylla were indeed united in the defence of Jerusalem; however, there was no romantic relationship between the two. Balian was married to Sibylla's step-mother Maria Comnena, Dowager Queen of Jerusalem and Lady of Nablus. The Old French Continuation of William of Tyre (the so-called Chronicle of Ernoul) claimed that Sibylla had been infatuated with Balian's older brother Baldwin of Ibelin, a widower over twice her age, but this is doubtful; instead, it seems that Raymond of Tripoli attempted a coup to marry her off to him to strengthen the position of his faction. However, this legend seems to have been behind the film's creation of a love-relationship between Sibylla and a member of the Ibelin family.
The events of the siege of Jerusalem are based on the Old French Continuation of William of Tyre, a favourable account partly written by Ernoul, one of Balian's officers, and other contemporary documents. Saladin did besiege Jerusalem for almost a month, and was able to knock down a portion of the wall. In the film Balian knighted everyone who could carry a sword, but historical accounts say he only knighted some burgesses. The exact number varies in different accounts, but it is probably less than one hundred in a city which had tens of thousands of male inhabitants and refugees. Balian personally negotiated the surrender of the city with Saladin, after threatening to destroy every building and kill every Muslim who entered. The film, however, downgrades the roles of Sibylla and of Patriarch Heraclius in the siege, transforming Heraclius, particularly, into a coward. Saladin allowed Balian and his family to leave in peace, along with everyone else who could arrange to pay a ransom, but thousands of poorer inhabitants who could not pay were sold into slavery.
The "uneasy truce" referred to in the closing scene actually refers to the Treaty of Ramla, negotiated, with Balian's help, at the end of the Third Crusade. The Third Crusade is alluded to at the end of the movie, when Richard I of England visits Balian in France. Balian, of course, was not from France and did not return there with Sibylla; she and her two daughters died of fever in camp during the siege of Acre. Conrad of Montferrat had denied her and Guy entry to the remaining stronghold of Tyre, and thus Guy was attempting to take another city for himself.
Balian's relations with Richard were far from amicable, because he supported Conrad against Richard's vassal Guy. He and his wife Maria arranged her daughter Isabella's forcible divorce from Humphrey of Toron so she could marry Conrad. Ambroise, who wrote a poetic account of the crusade, called Balian "more false than a goblin" and said he "should be hunted with dogs". The anonymous author of the Itinerarium Peregrinorum et Gesta Regis Ricardi wrote that Balian was a member of a "council of consummate iniquity," and described him as cruel, fickle, and faithless, and accused him of taking bribes from Conrad.
The young Balian of the movie thus did not exist in reality. The historical Balian had descendants by Maria Comnena. Thanks to their close relationship to Sibylla's half-sister and successor, Maria's daughter Queen Isabella (not shown in the movie), the Ibelins became the most powerful noble family in the rump Kingdom of Jerusalem as well as in Cyprus in the 13th century. Most notably, Maria and Balian's son John, the Lord of Beirut, was to be a dominant force in the politics of Outremer for the first third of the 13th century.
The historical accuracy of the film was analysed in an episode of The History Channel's series History vs. Hollywood. This and a Movie Real (a series by A&E Network) episode about Kingdom of Heaven, were both included on the DVD version of the movie.
