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It was issued just days after Gregory had succeeded Urban III as pope, in response to the defeat of the Kingdom of Jerusalem at the Battle of Hattin on July 4 of 1187. Jerusalem itself had fallen to Saladin on October 2 (see Siege of Jerusalem), but news of this had not yet reached Europe by the time the bull was issued at the end of the month.
As with other papal bulls, Audita tremendi takes its common title from the first few words of text, which do not necessarily make any grammatical sense on their own. The first line of the bull reads "Audita tremendi severitate judicii, quod super terram Jerusalem divina manus exercuit...", in English "On hearing with what severe and terrible judgement the land of Jerusalem has been smitten by the divine hand..." (the phrase "audita severitate" is a Latin grammatical construction known as ablative absolute).
The text follows the same format as Quantum praedecessores, the bull calling for the Second Crusade in 1145. It focuses specifically on the loss of Jerusalem and points to the sins of the Latin States as the reason for this great loss. As a result the people of Latin Christendom must repent for their sins. The bull offered a plenary indulgence, and offered church protection for the property of those who undertook the journey; thus through this logic the bull draws the conclusion that, due to the sins of the west, Jerusalem fell, and now the people of the west must repent by going on a crusade to recapture the kingdom.