Marlow means that Kurtz has lost his mind in his search for ivory. Kurtz has become so obssessed with the accumulation of ivory that he has set his own "kingdom" inside the Congo where he has become a sort of god for the natives, and has them working for him.
Kurtz first aspirations were to win the love of a woman. Hunting ivory in the jungle provided respect and power, and it would also earn the respect of his lover's family, who rejected Kurtz because he was poor.
