As a large part of Asia, from the Mediterranean Sea to the Indus, acknowledged the supremacy of the Abbassid Caliphs of Bagdad, the Jews of this dominion were subject to the Exilarch of Bagdad. The second Prince of the Captivity, who was surrounded with pomp, was Daniel, the son of Solomon (Chasdaï), who held office about 1165–1175. He was as much respected by the Caliphs Almustanjid and Almustadhi as his father had been by Almuktafi. Under Daniel, the Talmudical college of Bagdad was raised to such a height that it recalled the old times of the Amoraim and Geonim. It owed its rise to a man who, at the end of the twelfth century, was called upon to play an important part. Samuel, son of Ali Halevi, the rabbi of Bagdad, who traced back his genealogy to the prophet Samuel, possessed profound knowledge of the Talmud, such as but few in Asia equaled. But as he was unacquainted with the advance of the study of the Talmud in Spain and France, he continued to maintain the letter of the Talmud, and had not the ability to form an independent opinion. Samuel ben Ali had also a thin varnish of philosophical culture, but in that branch he was three centuries behind his time, being a disciple of the school of the Mutazilites. He knew nothing of the new discoveries of Ibn-Sina and Alghazali, nor of the later development of the philosophy of his Spanish co-religionists, of Ibn-Gebirol, Jehuda Halevi, and Abraham Ibn-Daud. Despite his limited range of vision, he deemed his own attainments very considerable, and was extremely proud of them. He was an arrogant and ambitious man. It appears that Samuel ben Ali assumed the pompous title of Gaon, that his college might obtain supremacy over the whole of Judaism. Two thousand students attended his Talmudical discourses; but before they were admitted to his lectures, they had to complete a preparatory course under another Talmudist. Samuel ben Ali delivered his lectures from a kind of throne, and clothed in gold and embroidery; he re-introduced the old custom of not personally addressing the audience, but of expounding the Law to an interpreter (Meturgeman), who repeated in a loud voice what he heard from the master. Besides him, there were nine men, who likewise delivered lectures, and decided questions of law. But Samuel ben Ali was regarded as judge of appeal, and every Monday he sat in court surrounded by the nine men who occupied subordinate positions.

When the Exilarch Daniel died (1175), Samuel thought the time propitious for obtaining the highest dignity and authority over the Asiatic congregations. Daniel left no male heir, and two of his nephews, David and Samuel, both of Mosul, were now contending for the Exilarchate. But whilst each of them was endeavoring to win over the political leaders and the congregations to his cause, Samuel ben Ali assumed all religious and judicial power. He appointed rabbis, judges, and other functionaries on his own authority, appropriated the revenues of the congregation, and delivered the specified portion to the state. His seal was more respected than that of the pretenders for the Exilarchate; his name was a protection to travelers, and through it they obtained access to all curiosities. The political and religious officials acknowledged only Samuel ben Ali, the principal of the college, and the Gaon of Bagdad. He, moreover, maintained his dignity by rigorous measures. Sixty slaves were continually at his call to bastinado any one pointed out by their lord. He had a palatial mansion in Bagdad, and magnificent pleasure gardens in the neighborhood of the capital. Thus Samuel ben Ali ruled at that time over all the Asiatic congregations from Damascus to India, and from the Caspian Sea to Arabia. His daughter was looked upon as a marvel, being so learned in the Bible and Talmud that she used to deliver lectures to young men, but in such a manner that she could not be seen by her audience. Ambassadors from a heathen nation, from the Moshic hills in Armenia (Tartars?), came to him to obtain Jewish religious teachers for their country, to instruct the people in the tenets of Judaism, seven of their chiefs having resolved to embrace that faith (about 1180–1185). The traveler Petachya, who has recorded these facts, and is a trustworthy witness, saw the ambassadors from the Caucasian hills with his own eyes. Many poor students from Babylonia and Egypt determined to repair to this remote nation of proselytes, and instruct them in the Bible and Talmud.

The condition of Judaism in Asia was at that time very low indeed. Without higher knowledge, without spirit or enthusiasm, the Jews of Asia, learned as well as unlearned, discharged their religious duties in a perfunctory, mechanical way. Even Talmudical scholars thought of the divine essence as a bodily form, with limbs, eyes, and motion. The Agada had so far perverted their understanding that they could not comprehend what was purely spiritual; and so saturated were these literalists with these perverted notions, that they looked upon those who upheld the belief in a spiritual God as heretics and atheists.

The Asiatic Jews had borrowed from the Mahometans and Christians the custom of making pilgrimages to the graves of pious men. A chief resort of pilgrims was the grave of the prophet Ezekiel in the neighborhood of Kufa. Seventy thousand to eighty thousand Jews came annually from New Year till the Day of Atonement, or Feast of Tabernacles, to pray at the supposed grave of the prophet of the exiles, among them also the Exilarch and the principal of the college at Bagdad. The tomb was protected by a vault of cedar wood, overlaid with gold and adorned with beautiful tapestry. Thirty lamps burned there day and night. Beside the tomb there was a handsome synagogue, which was regarded as a temple in miniature, and alleged to have been built by King Joachin and the prophet. In this synagogue a scroll of the Law of considerable size was shown, which was believed to have been written by the hand of the prophet himself. A separate room (Ginze) was set aside for books. Sepulcher and synagogue were enclosed by a turreted wall, the entrance to which was through a low narrow gate, which, however, according to popular belief, became higher and wider at the time of the pilgrimage. In the space inside the wall the pilgrims used to erect their booths for the Feast of Tabernacles. At this sepulcher they were not only devout, but also merry. The period after the Day of Atonement was dedicated to gaiety and feasting. As the Mahometans also reverenced the tomb, and even the wild Karmates, who lived nearby, swore by the God of Ezekiel, the region became a peaceful asylum, and later on an annual market (Pera) was held there, and a city (Kabur Kesil) sprang up. The offerings for the maintenance of this mausoleum proved so rich that the surplus was used for the support of Talmudical students and marriageable orphans.

Another resort of pilgrims was the supposed mausoleum of Ezra the scribe. Although this great regenerator of Judaism exercised his activity only in Judæa, legend nevertheless fixes his grave at Nahar-Samara, in the neighborhood of the Tigris. The Mahometans, as well as the Jews, reverenced this tomb, offered presents for its maintenance, and made pilgrimages to it. Like the Catholic Church, the Jews of Asia also showed sacred relics: the tree, separating into three parts, against which the angels who visited Abraham leaned, and the stone with which Abraham circumcised himself. All these mythical stories arose during the period of degeneration which followed the dissolution of the Gaonate.

It is possible that it was owing in part to this decay that many educated Jews apostatized to Islam. One apostate was a celebrated physician of Bagdad—Nathaniel, with the Arabic name of Abul-Barkat Hibat-Allah ben Malka, one of the three leading medical men of like name, but different creeds. The Jewish Hibat-Allah was surnamed "The only one of his time" (Wachid-al-Zeman), on account of his extraordinary accomplishments. In addition to a knowledge of medicine, he was versed in philosophy and Hebrew philology, and, whilst still a Jew, wrote a commentary on Ecclesiastes. A son of the itinerant Ibn-Ezra, named Isaac, who had accompanied his father in his travels, and remained in Bagdad, was assisted by the rich Hibat-Allah, and wrote spirited verses in praise of his benefactor and his commentary. At the end of his poem, Isaac Ibn-Ezra expressed a wish that his life might extend to the time of the Messianic redemption, and that he might yet behold the majesty of new Jerusalem. Neither, however, waited for this time, but renounced Judaism, and embraced Islam (1160–1170).

A third apostate of this time was Samuel Ibn-Abbas, son of the poet Jehuda, of Fez. A poet using beautiful Hebrew, a profound mathematician and philosopher, Samuel had emigrated to the East on account of the religious coercion exercised by the Almohades. His father settled at Haleb, and Samuel took up his residence in Adher-Baijan, entered into the service of the ruler of that place, and ultimately became a convert to Mahometanism. The old Jehuda Ibn-Abbas, on hearing of his son's change of religion, hastened to him full of grief, in the hope of bringing him back to his hereditary faith, but was suddenly seized with illness in Mosul, and died there. Samuel became a rancorous enemy of Judaism and his former co-religionists. He wrote a polemical work, "To the confusion of the Jews" (about 1165–1175), in which he lays bare and exaggerates their faults, and affirms that the Jews had eliminated all passages alluding to Mahomet in their holy writings.

If the Rabbanites in Asia were degenerate, the Karaites of this time were still more so. The Karaites, after an existence of 400 years, had failed to establish Judaism on a purely Biblical basis, but had of necessity been compelled to adopt many precepts of the Talmud, in spite of all their endeavors to steer clear of Talmudical tradition.

As the Mahometans of Egypt, under the dynasty of the Fatimides, were separated from those of the Abbasid Caliphate in Asia, the Egyptian Jewish community likewise had no connection with the Asiatic community. They had a chief of their own, recognized by the Caliph, who exercised spiritual and judicial functions, bore the title Nagid (Arabic, Reïs), and was, in a sense, the Egyptian Exilarch. The Nagid had authority to appoint or confirm rabbis and precentors, and to impose fines, scourgings, and imprisonment, for transgressions and crimes. He received a regular salary from the congregations and fees for the drawing up of legal documents. There is a legend that the institution of the Nagid was introduced into Egypt at the instance of a Bagdad Caliph's daughter, who was married to a Fatimide Caliph. About this time Nathaniel, succeeding Samuel Abu-Mansur, was invested with this dignity. His Arabic name was Hibat-Allah Ibn-Aljami, and he served as physician in ordinary to Aladhid, the last Fatimide Caliph of Egypt, and later on to Saladin. Ibn-Aljami was a man of considerable culture and learning. He spoke Arabic with great fluency, wrote several medical treatises, among others a guide for the soul and the body, and a treatise on the climatic character of Alexandria. He was much praised for having cleverly discovered life in a man who was about to be interred. This accomplished man was also chief of the college in the Egyptian capital, but he had no reputation as a Talmudist.

The chief congregation was in Cairo (New Misr), and it consisted of 2000 Jewish families, including many men of great wealth. The city had two synagogues, one following the Palestinian ritual and the other the Babylonian. According to the first the reading of the Pentateuch on Sabbaths extended over a cycle of three years. The adherents of the Babylonian system, on the other hand, completed it in a cycle of one year. Only on the Feast of Weeks and on the Festival of the Rejoicing of the Law the two congregations had a common service. In Cairo there existed also a Karaite congregation which is said to have been still more numerous than that of the Rabbanites. It also had a Chief Rabbi who possessed plenary power in religious and judicial matters, and bore the title Prince (Nasi, Reïs). About this time, Chiskiya and Solomon I, who believed themselves to be descendants of Anan, successively held this office (about 1160–1200). Many Karaites in Egypt enjoyed favor at court, and were in general superior to the Rabbanites.