In 1999, he set a world record in the 100 m butterfly twice, in a FINA-sanctioned time trial (51.81 s). It was broken at the 2003 World Championships in Barcelona by the Ukrainian Andriy Serdinov in the first semifinal of the 100 m butterfly, and then broken another time in the next semifinal by Michael Phelps. Phelps's record was bested by Ian Crocker in the final the following day.
Klim was Australian Institute of Sport Athlete of the Year in 1998 and 1999 and was inducted into the AIS ' Best of the Best' in 2001. Klim was the only Australian to win a Gold medal at both the Sydney 2000 Olympics and the 2006 Melbourne Commonwealth Games.
In 1996, he arrived at the Atlanta Olympics ranked first in the world for the 200 m freestyle, but was surprisingly eliminated in the heats. He rebounded to qualify for a finals in the 100m butterfly, and swam the freestyle leg in the 4×100 m medley relay, in which Australia claimed a bronze medal.
1998 was Michael Klim's year in the sun. In January, the World Aquatics Championships were held in Perth, Western Australia, and in front of a boisterous home crowd, he was the leading swimmer of the meet. He triumphed in the 200 m freestyle and the 100 m butterfly, and added silver in the 100 m freestyle, and bronze in the 50 m freestyle. He was a member of each of Australia's three relay teams, winning gold in the 4×200 m freestyle relay and 4×100 m medley relay, and a silver in the 4×100 m freestyle relay.
At the 2000 Summer Olympics, Klim set a world record (48.18) leading off the 4×100 m freestyle relay, which paved the way for a world record (3:13.67). Three days later, he was part of the 4×200 m freestyle relay, which set another world record (7:07.05), which left the opposition over 5 seconds in arrears on its way to victory. His 100m freestyle world record bested by Pieter van den Hoogenband in the semi's, in the final he finished with a bitter 4th place, he turned first at the wall but he claimed his legs gave away in the second half. In the 100 m butterfly, he was the world record holder, again turning first at the wall heavily under world record pace, but was cut down in the closing stages by Sweden's Lars Frölander, finishing second. On the final night he claimed silver as part of the 4×100 m medley relay team.
In 2001, hampered by an ankle injury Klim was restricted to relay duties, and contributed to another world record, winning gold in the 4×200 m relay (7:04.66). He also collected a gold medal in the 4×100 m freestyle relay.
In 2002 and 2003, due to chronic back and shoulder problems, Michael Klim was inactive throughout these years.
Klim failed to qualify for the 2004 Athens Olympics, but was later selected as part of the relay team, which came second behind USA in the 4×200m, race. The relay team did not win a medal in the 4x100m and failed to qualify for the medley relay final.
In 2005, Klim swam at the World Aquatics in Montreal, returning to individual action, but failed to progress to the finals in the 50m & 100m Freestyle. He won bronze as part of the 4×100 m freestyle relay.
On the 26 June 2007 Klim retired from competitive swimming. He finished the year ranked 94 in the 100 freestyle with the Olympics 14 months away, however, in February 2011 Klim announced a comeback to competitive swimming with a view to seeking selection for the 2012 London Olympics.
Klim married Lindy Rama, a former model and fashion entrepreneur, in April 2006. Rama (known in Bali as Anak Agung] is a Balinese princess, being the niece of Ida Cokorde Pamecutan XI, the king of Denpasar. The couple have two daughters, Stella (born January 2006) and Frankie (born June 2011) and a son, Rocco (born May 2008).