His mother Puteri Raja Inderabangsa was the daughter of the tenth Sultan Alauddin Ri'ayat Syah Sayyid al-Mukammal.

Upon the conquest of Johor, its sultan, Alauddin Riayat Shah III, and other members of the royal family were brought to Aceh, along with a group of traders from the Dutch East India Company.

After this loss, Iskandar Muda launched only two more sea expeditions, in 1630/1 and 1634, both to suppress revolts in Pahang and to firmly establish Islam in the region.

[11] It is recorded that Sultanate of Aceh during reign of Iskandar Muda has managed relationship with the Mughal Empire, as both were exchanging gifts, with one of the presents from Iskandar Muda sending emperor Shah Jahan with twelve elephants,[12] while later, his daughter, Sultanah Safiatuddin, also presenting gift to successor of Shah Jahan, Aurangzeb, with eight elephants.

[13] Other major exports included cloves and nutmegs, as well as betel nuts, whose narcotic properties bypassed the Muslim prohibition of alcohol.

Iskandar Muda also made shrewd economic decisions that supported growth, such as low interest rates and the widespread use of small gold coins (mas).

[14] However, like other sultanates in the area it had trouble compelling the farms in the hinterland to produce sufficient excess food for the military and commercial activities of the capital.

[10] One reason for Iskandar Muda's success, in contrast to the weaker sultans who preceded and succeeded him, was his ability to suppress the Acehnese elite, known as the orang kaya ("powerful men").

[15] The orang kaya were forced to attend court where they could be supervised, and were prohibited from building independent houses, which could be used for military purposes or hold cannons.

[16] He sought to create a new nobility of “war leaders” (Malay language: hulubalang; Acehnese: uleëbalang), whom he gave districts (mukim) in feudal tenure.

[15] He also sought to replace the Acehnese princes with royal officials called panglima, who had to report annually and were subject to periodic appraisal.

Iskandar Muda favoured the tradition of the Sufi mystics Hamzah Pansuri and Syamsuddin of Pasai, both of whom resided at the court of Aceh.

Both were later denounced for their heretical ideas by Nuruddin ar-Raniri, who arrived in the Aceh court during the reign of Iskandar Thani, and their books were ordered to be burnt.

Through this statement, the hikayat presented Aceh as a part of the Malay world, since Iskandar Zulkarnain was the purported ancestor of the Melaka, Johor, Perak and Pahang rulers.

[21] Posthumously he was given the title Po Teuh Meureuhom, which means "Our Beloved Late Lord",[2] or "Marhum Mahkota Alam".