Baldwin fell seriously ill in late 1116. Thinking that he was dying, he ordered that all his debts be paid off and he started to distribute his money and goods, but he recovered at the start of the following year. To strengthen the defence of the southern frontier, he launched an expedition against Egypt in March 1118. He seized Farama on the Nile Delta without a fight as the townspeople had fled in panic before he reached the town. Baldwin's retainers urged him to attack Cairo, but the old wound that he had received in 1103 suddenly re-opened.

Dying, Baldwin was carried back as far as Al-Arish on the frontier of the Fatimid Empire. On his deathbed, he named Eustace III of Boulogne as his successor, but also authorised the barons to offer the throne to Baldwin of Edessa or "someone else who would rule the Christian people and defend the churches", if his brother did not accept the crown. Baldwin died on 2 April 1118.