From an essay I wrote on the subject for my high school english class
Around the year 1099, the Crusaders captured the Holy Land of Jerusalem from the Moslems. Still, Moslems controlled some of the land around Jerusalem (Palestine), and Christians making a pilgrimage to the holy land through their territory were often attacked. After many of the Crusaders had returned to their homeland, pilgrimage was a very dangerous undertaking.
The few Crusaders that remained in Jerusalem saw the problem the pilgrims were facing. In response to Moslem attacks, they created the Knights Templar, a Christian brotherhood with the sole purpose of clearing the nearby roads of enemies and to defend pilgrims travelling to the city. The Knights Templar became well known for their courage and skill in battle. They took monastic vows of poverty, chastity, and obedience, and called themselves “Poor Fellow Soldiers of Jesus Christ”.
In the year 1118, the Poor Fellow Soldiers of Jesus Christ were officially recognized by the Church after 19 years of service. They were assigned a headquarters at the former site of the Temple of King Solomon. They then became known as Knights of the Temple, from which their modern name, Knights Templar, is derived.
The Templar continued to draw the admiration of the public, and various rulers of the time made large donations to the group in order to be identified with them. In the coming centuries, they lost more and more battles, but gained more money. Kings became jealous of their wealth. In 1314, King Philip of France arrested Jacques de Molay, Grand Master of the Knights Templar, and charged him with heresy. He was burned at the stake and all the Templar’s property was seized by France.
After Jacques de Molay was killed, the Templar were forced to go underground. Some believe that the organization remained in existence but hiding until the 18th century, when it resurfaced as a branch of the Masonic Order. However, there is little proof to support these claims. The Knights Templar remain today primarily as a charity organization.
Most of the information above was gathered from <http://www.knightstemplar.org/>