Most histories of the Crusades tend to focus on the Crusaders themselves and the perspectives of European Christians seeking conquest and plunder in the Holy Land. But what about the Muslims whose lands were invaded and cities sacked? What did they think about these religious armies marching out of Europe?
To be honest, they didn't even know that there was something to be concerned about at first. The Crusades might have elicited a great deal of excitement back home, but it wasn't even until modern times that Arabic developed a term for the phenomenon: al-Hurub al-Salibiyya, "Wars of the Cross." When the first European armies hit Syria, Muslims there naturally thought that this was an attack from the Byzantines and called the invaders Rum, or Romans.
Eventually they realized that they were facing a completely new foe, but they still didn't recognize that they were being attacked by joint European forces. French commanders and French knights tended to be at the forefront of the fighting in the First Crusade, so Muslims in the region simply referred to the Crusaders as Franks no matter what their actual nationality. As far as the Muslims were concerned, this was simply another stage in Frankish imperialism that had been experienced in Spain, North Africa, and Sicily.
It was probably not until after permanent kingdoms were established in the Holy Land and regular reinforcements from Europe began arriving that Muslim leaders began to understand that this was not Rome reasserting itself or Frankish imperialism anymore. No, they were facing an entirely new phenomenon in their relations with Christendom - one which required a new response.
That response was the attempt to create greater unity and a common sense of purpose among Muslims like they had experienced during the earliest years of their expansion. Just as European victories were often attributable to high morale and a sense of common religious purpose, Muslims were able to effectively retaliate when they stopped bickering among themselves so much. The first leader to begin this process was Nur al-Din, and his successor, Salah al-Din (Saladin), is remembered even today by both Europeans and Muslims for both his military skills and his strong character.
Despite the efforts of leaders such as these, for the most part Muslims remained divided and, at times, even indifferent to the European threat. Occasionally religious fervor took hold and inspired people to participate in campaigns against the Crusaders, but much of the time people who didn't live around the Holy Land simply didn't worry about it - and even those who did sometimes signed treaties with Crusader leaders against rival Muslim kingdoms. As disorganized as they were, though, the Europeans were usually far worse.
In the end, the Crusaders didn't leave much impact. Muslim art, architecture, and literature are almost entirely untouched by the extended contact with European Christians. Muslims didn't feel that they had much of anything to learn from the barbarians who came out of the north, so it was a very rare scholar to took the time to find out what the Christians thought or did.