Klim was first selected to represent Australia in the Commonwealth Games in Victoria, Canada in 1994. 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 position in the 100 m butterfly, and swam the freestyle leg in the 4x100 m medley relay, in which Australia claimed a bronze medal.
1998 was Michael Klim's year in the sun. In January, the World Championships were held in Perth, 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 50 m freestyle. He was a member of each of Australia's three relay teams, winning gold in the 4x200 m freestyle relay and 4x100 m medley relay, and a silver in the 4x100 m freestyle relay. For his achievements he was named the swimmer of the year by SwimmingWorld magazine.