A Boyhood Dream Comes True

A freshly turned face, Michaels returned to the Intercontinental Title picture by defeating Jeff Jarrett in July 1995. This would lead to a title defense against Razor Ramon at SummerSlam 1995, in ladder match (a rematch of their epic at WrestleMania X), which Michaels won. Around this time, Michaels became the perceived leader of a backstage group known as The Clique, which obtained sufficient clout with WWF owner Vince McMahon to become the dominant wrestling figures in the promotion for several years in the mid-1990s. For storyline purposes, Shawn's fanbase was later nicknamed "The Kliq" as an inside reference to the real "Clique." In October 1995, was allegedly attacked by several thugs outside a Syracuse bar, and would be unable to defend the Intercontinental Title against Dean Douglas at the In Your House PPV. Michaels thus forfeited the title to Douglas that night, who then himself lost the title to Michaels' real life friend and Clique member Scott Hall (a move supposedly forced by Michaels, who refused to lose to Douglas.)

Then, in the next month, Michaels had a match with Owen Hart on Monday Night Raw. During the match, Owen nailed Michaels with an Enzuigiri kick to the back of Michaels' head. They continued to wrestle, but Michaels then collapsed in the ring, supposedly because he had already suffered a concussion at the hands of the aforementioned "Syracuse thugs". (This was a work, unbeknownst to fans at the time.) The WWF then released a tribute to Michaels, titled "Tell Me A Lie", furthering the speculation that Michaels could retire. Michaels then announced he would be returning to the WWF at the 1996 Royal Rumble, which he won, making him a two-time winner of the Rumble and second man to ever win two in a row (Hulk Hogan being the first winning in 1990 and 1991). Michaels would gain revenge on Owen at the February In Your House, defeating him despite having put his title shot on the line in the match. During this time, Jose Lothario, Michaels' original trainer, became his manager.

Shawn won his first WWF Championship at WrestleMania XII, defeating Bret Hart in a the first ever 60 minute Iron Man Match, after failing to win it at last year's WrestleMania. His first feud after winning the title was against Diesel, at the In Your House titled "Good Friends, Better Enemies." He defeated the freshly turned heel Diesel, in what would be Diesel's final televised match (as Kevin Nash then headed to WCW with Scott Hall.) Michaels then had a feud with Bret Hart's brother-in-law, the British Bulldog, after the Bulldog accused him of trying to have an affair with his wife. Afterwards, he faced off against Vader, who had recently jumped from WCW to the WWF, throughout the summer of 1996. Michaels' title reign ended at the 1996 Survivor Series in November, where he was beaten by Sycho Sid, his former bodyguard, at Madison Square Garden. This match was notable as the New York fans audibly cheered for Sid when he hit both Michaels and Lothario with a television camera, and cheered again when he won the match and championship.

At the 1997 Royal Rumble, Michaels recaptured the WWF Title from Sid in front of his hometown fans in San Antonio, in what would be Lothario's last match as his manager.

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