Late in the evening of September 18, Karl attained Category 3 status, becoming the fifth major hurricane of 2004. On September 19, Karl continued to strengthen, maintaining a well-defined eye, and strengthening late that day into a Category 4 hurricane with winds of 135 mph (215 km/h) and a minimum pressure of 948 mbar. Early on September 20, the storm weakened slightly as a result of an eyewall replacement cycle, falling back to a high-end Category 3 storm. At this time Karl began to turn sharply northward into a weakness in the subtropical ridge.
After intensification stopped on September 20 due to the eyewall cycle and slightly increased wind shear, Karl quickly restrengthened that evening over very warm water, and early on September 21 reached its peak intensity as a powerful Category 4 hurricane with 145 mph (230 km/h) winds and a minimum central pressure of 938 mbar. That morning, as Karl was moving northward, another eyewall replacement cycle began to take place and vertical shear increased, again weakening the storm temporarily. The trend continued into the evening, and the storm weakened to a Category 2 hurricane by early on September 22. The weakening trend slowed down and eventually leveled off that afternoon with Karl remaining a Category 2 hurricane as the storm turned towards the north-northeast. Late that evening, Karl began to restrengthen once again as wind shear diminished. The intensification continued into the morning of September 23, as Karl became a major hurricane a second time, reaching a final peak of 125 mph (205 km/h) winds. Cooler waters and increased shear soon prevailed, however, and the storm quickly weakened, dropping to a Category 1 hurricane by late that evening as the low-level circulation became detached from the mid-level circulation due to the strong southwesterly vertical wind shear.
Early on September 24, Karl continued its north-northeast track over the open north-central Atlantic and continued to gradually weaken. It started to come in contact with the baroclinic zone and began to lose tropical characteristics, while still a Category 1 hurricane. Karl became extratropical shortly afterward over the northern Atlantic at about 47°N, with its winds dropping below hurricane strength shortly thereafter. The extratropical storm made landfall on the Faroe Islands with hurricane-force wind gusts. As an extratropical low, the cyclone moved northeastward and eastward across the North Atlantic Ocean and the North Sea, eventually reaching Norway before it was absorbed into another extratropical low late on September 28.