In 1775, Queen Maria Theresa of Austria nominated him to be Bishop of the Diocese of Knin. This was confirmed by the Vatican later that same year and he was consecrated by Bishop Zichy. Two years later, with the concurrence of Pope Pius VI, the Queen appointed him Bishop of the Diocese of Szombathely. He took up his new chair, on his birthday, in the presence of PrimateJózsef Batthyány [hu].
As one of his first acts, he commissioned the scholar of ancient Jesuit history, István Schönvisner [hu], to compile a general history of Savaria-Szombathely, which was published in Pest in 1791, with the title Antiquitatum et historiae Sabariensis ab origine usque ad praesens tempus. Savaria was the city's original Roman name.
With sketches and plans sent to him by his agents in Rome, he began a series of architectural projects; demolishing the ruins of the old fortifications, building a seminary (1777-1780), Bishop's palace (1780-1783) and a cathedral (1791-1797). For the execution and decoration of these buildings, he retained the services of several well known architects and artists; including Melchior Hefele [hu], Stephan Dorfmeister, Franz Anton Maulbertsch and Josef Winterhalder.
He also promoted the interests of various Hungarian minorities; such as the Germans, Croats and Slovenes. In addition to founding schools, he donated a large sum to the writer, Miklós Küzmics, who translated the Bible into Prekmurje Slovene, thereby establishing a standard for that dialect.
Sources
Gyula Géfin, A Szombathelyi egyházmegye története (1777-1928) (History of the Diocese of Szombathely), 1929 (Online) @ Library Hungaricana
A. F. Sill, "A személyiség szerepe Szily püspök alkotásaiban" (The Role of Personality in the Works of Bishop Szily), in Vas megyei levéltári füzetek (Vas County Archival Records), C/II (1993), pp. 15–25
István. Szilágyi, "Szily János, a városépitô (1735-1799)" (János Szily, the City Builder), in Vasi Szemle, XLIV/1 (1990), pp. 63–67
Konrad Eubel, Hierarchia Catholica Medii Aevi, Vol.6, pg.408 Online