He was designated heir by his older brother Henry II when the latter went to the Holy Land on the Third Crusade, and succeeded him upon his death.

He died young, and was succeeded by a posthumous son, Theobald IV, while his widow, Blanche of Navarre, ruled as regent.

Theobald III was the younger son of Count Henry I of Champagne and Marie of France.

There was little enthusiasm for the crusade at first, but on 28 November 1199 various nobles of France gathered at Theobald's court for a tournament (in his castle at Ecry-sur-Aisne), including the preacher Fulk of Neuilly.

[a][4] There, they "took the cross", and elected Theobald their leader, but he died in 1201 and was replaced by Boniface I, Marquess of Montferrat.