The internal situation in the Seleucid domains was so convoluted, and Diodotus was so eager to gain allies, that in 143 BC Hasmonean rule was reinstated in Judea in exchange for aid. True to their words, several Jewish armies marched against Diodotus' rival Demetrius and opposing cities. However, the Jewish forces under the High Priest Jonathan behaved too boldly, leading to his capture and murder by ruse when Diodotus marched into Judea. Despite his preparations and intentions to cow the Jews, Diodotus was entirely unsuccessful, and left the region under the rule of Jonathan's brother Simon, with little gain beyond a minor tribute of 100 talents. Finally, in 138 Diodotus was attacked and defeated in Antioch by Antiochus VII of Side. Diodotus committed suicide after his defeat.
In 138 BC, Diodotus claimed that his charge had contracted an illness and supposedly required surgery, during which he died - presumably disguising his murder at his supposed benefactor's bequest.