He was still in college in Vienna when he assumed the throne of the Khedivate of Egypt upon the sudden death of his father. He was barely of age according to Egyptian law; eighteen in cases of succession to the throne. For some time he did not cooperate very cordially with the United Kingdom, whose army had occupied Egypt in 1882. As he was young and eager to exercise his new power, he resented the interference of the British Agent and Consul General in Cairo, Sir Evelyn Baring, later made Lord Cromer. At the outset of his reign, Khedive Abbas surrounded himself with a coterie of European advisers who opposed the British occupation of Egypt and Sudan and encouraged the young Khedive to challenge Cromer by replacing his ailing prime minister with a nationalist. At Cromer's behest, Lord Roseberry, the British foreign secretary, sent him a letter stating that the Khedive was obliged to consult the British consul on such issues as cabinet appointments. In January 1894 Abbas, while on an inspection tour of Egyptian army installations near the southern border, the Mahdists being at the time still in control of Sudan, made public remarks disparaging the Egyptian army units commanded by British officers. The British commander of the Egyptian army, Sir Herbert Kitchener, immediately offered to resign. Cromer strongly supported Kitchener and pressed the Khedive and prime minister to retract the Khedive's criticisms of the British officers. From that time on, Abbas no longer publicly opposed the British, but secretly created, supported, and sustained the nationalist movement, which came to be led by Mustafa Kamil. As Kamil's thrust was increasingly aimed at winning popular support for a National Party, Khedive Abbas publicly distanced himself from the Nationalists.

In time he came to accept British counsels. In 1899 British diplomat Alfred Mitchell-Innes was appointed Under-Secretary of State for Finance in Egypt, and in 1900 Abbas paid a second visit to Britain, during which he frankly acknowledged the great good the British had done in Egypt, and declared himself ready to follow their advice and to cooperate with the British officials administering Egyptian and Sudanese affairs. The establishment of a sound system of native justice, the great remission of taxation, the reconquest of Sudan, the inauguration of the substantial irrigation works at Aswan, and the increase of cheap, sound education, each received his formal approval. He displayed more interest in agriculture than in statecraft. His farm of cattle and horses at Qubbah, near Cairo, was a model for scientific agriculture in Egypt, and he created a similar establishment at Muntazah, near Alexandria. He married the Princess Ikbal Hanem and had several children. Muhammad Abdul Mun'im, the heir-apparent, was born on 20 February 1899.

His relations with Cromer's successor, Sir Eldon Gorst, were excellent, and they co-operated in appointing the cabinets headed by Butrus Ghali in 1908 and Muhammad Sa'id in 1910 and in checking the power of the Nationalist Party. The appointment of Kitchener to succeed Gorst in 1911 displeased Abbas, and relations between him and the British deteriorated. Kitchener often complained about "that wicked little Khedive" and wanted to depose him.

When the Ottoman Empire joined the Central Powers in World War I, the United Kingdom declared Egypt an independent Sultanate under British protectorate on 18 December 1914 and deposed Abbas. Abbas supported the Ottomans in the war, including leading an attack on the Suez Canal. His uncles Hussein Kamel and then Fuad I, the British choices for their Protectorate, issued a series of restrictive orders to strip Abbas of property in Egypt and Sudan and forbade contributions to him. These also barred Abbas from entering Egyptian territory and stripped him of the right to sue in Egyptian courts. Abbas finally accepted the new order of things on 12 May 1931 and abdicated. He retired to Switzerland where he died at Geneva 19 December 1944.

He married firstly in Cairo on 19 February 1895 Crimean Ikbal Hanim (Crimea, 22 October 1876 - Jerusalem, 10 February 1941) and had six children. He married secondly at Çubuklu, Bosphorus, on 1 March 1910 and divorced in 1913 Hungarian Noblewoman Marianne Török de Szendrö, who took the name Zübeyde Cavidan Hanım (Philadelphia, Philadelphia County, Pennsylvania, 8 January 1874 - aft. 1951), without issue.