The main story of the first Assassin's Creed game begins in 1191, during the Third Crusade. Altaïr Ibn-La'Ahad is sent across the Holy Land to pursue targets connected with the Templar Order.
The game uses real historical locations including Masyaf, Jerusalem, Acre, and Damascus. Its fictional conspiracy is placed alongside the conflict between Christian and Muslim forces, but the plot is not a literal reconstruction of the crusade.
A common mix-up is confusing the game's setting with the date of its modern-day sections. The framing story takes place in the early twenty-first century, while Altaïr's missions occur in 1191. The game also includes later memories and fictional elements that should not be treated as documented history.
The period matters because it establishes the series' recurring contrast between a historical protagonist and a modern character uncovering a hidden conflict. Later games shift to different eras, but retain this dual-timescale structure.