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This article focuses on the writing of Þórðar saga kakala by an unnamed author in c. 1275 and its connections to its literary- and political-historical contexts. In extant form Þórðar saga kakala covers the years of Icelandic history between 1242–1249/50 and 1254–1256, with a special focus on the figure of Þórðr kakali Sighvatsson (c. 1210–1256) who — for a short period during the Sturlunga Age — controlled all Iceland unopposed. Because of the subject matter of Þórðar saga kakala, including the characters featured therein, the origins of Þórðar saga kakala cannot be discussed apart from the high political history of 1270s Iceland. At this time, royal office was being shared between two old rivals, the southern bishop was attempting to wrest control of church estates from their lay owners, and the Norwegian king was implementing legislative reform on Iceland. In addition to political history, literary history must also be covered: it is essential for understanding the reception of Þórðar saga kakala, and serves to illuminate its origins further. Chief, in this regard, is the saga’s relationships with the writings of Sturla Þórðarson (d. 1284) about contemporary political history: Hákonar saga Hákonarsonar (covers 1204–1263; written c. 1264–1265) and Íslendinga saga (covers 1183–1264; written c. 1277–1284). By closely reading Þórðar saga kakala through historical-critical and intertextual lenses, this article nuances the picture of the political history of 1270s Iceland provided in the sources (chiefly Árna saga biskups and the annals), whilst also detailing an instrumental episode in the formative history of the Sturlunga saga compilation through which Þórðar saga kakala comes down to us today.