Isaac inaugurated his reign with a decisive victory over the Norman King of Sicily, William II, at the Battle of Demetritzes on 7 November 1185. William had invaded the Balkans with 80,000 men and 200 ships towards the end of Andronikos I's reign. William II had recently sacked and captured the Byzantine Empire's second city, Thessalonica. It was a decisive Byzantine victory, which led to the immediate re-occupation of Thessalonica and ended the Norman threat to the Empire.

The remnants of the Norman army fled by sea with many ships being subsequently lost to storms. Any Normans who did not manage to escape from Thessalonica were massacred by the Alan troops of the Byzantine army in revenge for the deaths of their kinsmen when the city was sacked. The Norman fleet under Tancred of Lecce, which was in the Sea of Marmara, also withdrew. The city of Dyrrhachium on the Adriatic coast was the only part of the Balkans that remained in Norman hands and this fell the following Spring after a siege, effectively ending the attempted Sicilian conquest of the Empire. The Kingdom of Sicily had suffered enormous losses in killed and captured. More than four thousand captives were sent to Constantinople, where they suffered great mistreatment at the hands of Isaac II.