2000–2012: Commercial stardom, decline and hiatus
In 2000, he directed two films. Narasimham, released in the first weeks of the year, with Mohanlal in the lead came Thandavam, though evoked one of the biggest initial pulls in the history of Malayalam cinema, Thandavam failed at the box office. He took a break for one year. It was at this time, Kailas again tried out his luck in Tamil with Jana in (2004).
In the year 2004 Shaji Kailas made a comeback in Malayalam with Natturajavu. With Mohanlal in lead role and, scripted by T. A. Shahid, Natturajavu was a commercial success Chinthamani Kolacase, a vigilante action thriller with Suresh Gopi in leading role and Baba Kalyani with Mohanlal released. Both were hits at the box office. However, his first film with Dileep, The Don, turned into a huge flop in 2006. The next film, But things again got lost in the same year itself. His first film with Dileep, The Don, turned into a huge flop. The next film Baba Kalyani, starring Mohanlal, was an average hit. But then came a series of flops. Time (2007), Alibhai (2007), Sound of Boot (2008), all bombed. Alibhai, was a big budget film with all leading stars in a row appeasing, but still bombed at box office. Even hard core Mohanlal fans couldn't digest the film. Then came Red Chilliess in 2009, it was a moderate success at box-office. In January 2010, Shaji Kailas directed Drona 2010, which received mixed reviews. Beginning of 2011 showcased his attempt to reclaim his position within Malayalam industry with the sequel of yesteryear mega hit August 1, August 15 which garnered heavy negative reviews from critics and audiences alike and was finally declared as another flop by Shaji Kailas. His next movie was with Mammotty and Suresh Gopi named The King and the Commissioner the movie was the next part of the yesteryear films The King and Commissioner. This movie was a hit in the box office but this movie also received a good amount of positive reviews from both the critic and the audiences.