Originally a local religious activist group founded in Persia by Hasan i Sabbah an agent of the then Cairo based Ishmaelian sect. Hasan came to be regarded as the true Imam by his disciples and demanded absolute obedience to his strict rule. He trained a school of agents and assassins at his base, Alamut or the Eagles Nest. The term for his devotees -- Hashishans, may be derived from 'hashish' or from a local term for 'devotee'. These were said to be rewarded with hashish for their devotion to the cause of Hasan. This cause seems to have been the propogation of Ishmaelian doctrines in the region and the overthrow of powers hostile to this objective. A powerful network of agents was allegedly run from Alamut with eyes (and daggers) in every court. Contrary to myth Hasan was a devout Muslim (within his own context) and strictly enforced Islamic Law, to the point of executing his own sons for breaking it. It should be mentioned however that his attitude was actually liberal for his period, which like now saw this region dominated by extreme Islamic fundamentalists who would have given the Ishmaelis no more mercy than they were shown by Hasan. A disciplined organisation was necessary for the kind of mission Hasan had set himself.
Unconfirmed stories add different aspects to this basic account. One is that Hasan was also influenced by a Gnostic called Abdullah, who added a degree of Gnostic 'heresy' to the teachings at Alamut. Even more extraordinary (though perhaps apocryphal) is the tale that Hasan kidnapped his school friend the poet-philosopher Omar Khayyam in Samarkand and kept him at Alamut for some time. The result of which was his exposure to the 'dangerously' libertarian Rubaiyat of Omar Khayyam which he banned and kept under lock and key. An added touch is that on his deathbed Hasan gave up to this 'anarchic doctrine' and declared 'nothing is true, everything is permitted!'
Whether that is true or not it is certainly a fact that a subsequent master of the Assassins, Hasan II, took this notion very seriously. In fact he made it compulsory declaring that he and his followers were above all morality and that basically 'anything went'. Islamic Law was thus abolished in Alamut. Alas he was assassinated very swiftly by traditionalists in his own organisation.
A childhood friend of Hasan II, Richad al Din, was given the role of leader of the Syrian branch of the Assassins by him. Richad is a crucial figure in the story, as it was basically him who built up the Syrian Assassins into the terrifingly efficient secret network known to the Crusaders, and the West ever since. He is also a mystery: Privately his views seem close to Hasan II, but publically he never challenged the traditions of the local Assassins.
However stories (again unconfirmed) claim his degree system progressively de-brainwashed the Assassin as they rose in the ranks. First they were told that orthodox Islam was false and to accept only Ishmaelianism, then if they accepted this, 'inner teachings' (including Sufism, which was highly influencial on Syrian Assassins) were revealed in subsequent initiations. Few went beyond this it seems (candidates were carefully chosen), but after this higher initiates were told they were free of Islamic Law, which could be ignored (or practised merely pragmatically in public), and so on, progessively 'revealing' that the Koran was not the true word of Allah and finally at the highest initiation that Islam itself was false and that only the direct revelation of the Iman (as a god incarnate) was true and the basis of law, basically whatever the boss said was true, and he demanded unquestioning obedience. The rare initiate that reached this far was then instructed to seperate himself and devise his own 'religious cult' to teach the same anarchic docrine. Thus this was a practise with elements of Gnostic liberation but also a potentially tyrannical one.
Most historians (particularly Islamic ones) regard the above account as a late invention of the romantic imagination, and given its radicality they may be right. However it would make sense given the known history of Hasan II, and we do know for a fact that Richad was very influenced by Sufism and regarded Islamic Law as dispensible.
Richad was very tolerant towards other religions, unlike his predecessors, and made approaches to the Crusader kings. But any chance of an alliance was ruined by an attempt on his life by the Knights Templar, something apparently more due to political incompetence than devious plot. From then on both these camps viewed each other with suspicion. Richad died soon after and was replaced with an apparently more conventional leader. It was then that a pact was made with the Templars and exchanges made between the two Orders.
The Syrian Order seems to have become more and more corrupt after this, and after the Crusades fades away into obscurity. Alamut itself was eventually overrun by the Mongols and the Order of Assassins destroyed.
Rumours of sects of surviving Assassins have since been circulated, but are on a par with similar rumours about the Templars.
Ishmaelianism survives today (in a much more moderate form) under the leadership of the Aga Khan.