Armor

It is unknown if Altaïr wears armor beneath his outfit, but it is not mentioned in the game, never upgraded, and doesn't reduce damage in combat. For all intents and purposes, armor in Assassin's Creed is non-existent for the playing character. He does, however recover his boots and gloves when advancing in rank. These seem to be made of some type of leather. There are also theories that he has a form of chain mail under his attire, as he can take far more damage than people who you can easily tell is wearing armor, such as guards of various types. (shown below)

It should be noted, however, when you take damage in game, Altair doesn't get hurt, you just lost synchronization with the actual memory. (Which meant that Altaïr never got hurt).

Altaïr has many other defenses available to him, however, and these are used very often during the game. The defense most related to actual combat is his ability to block and counter with the majority of his weapons. Against a single opponent, Altaïr can block nearly every attack. His strong athletic abilities allow him to flee the more dangerous situations by running through streets, up walls, or along rooftops. As soon as he has broken line of sight with his pursuers, he can use Social Stealth to escape attention.

Armor does appear on other characters in the game, and there are differences in the styles worn by guards in each city. The guards in Damascus can be found in either lamellar, likely leather, or ringmail armor. Guards in Acre can be found in brigantine armor and chain mail, some complete with coifs. Guards in Jerusalem are often found wearing scale or splintmail. Each of these guard types can be found in the Kingdom near their respective cities. The Knights Templar uniformly wear full suits of chain mail covered in a white tabbard with a steel helm covering their face jghjegehftrtsrhsrttrsuiig67f6e46e546765t97tae67fygygvgcscgdgdcsdcvsfcvsdcfsudcfuydscguydfscgsugvsdhgdsgghdsghasdghsdgvgysfgvuygcfghsdfcghsdthkg