Leather is the tanned hide of an animal, and is a fairly versatile material. Leather can be used to make bags, quivers, backpacks, waterskins, clothing, shields, armor, and decorations, all at a leather works. Leather crafts are made at a craftsdwarf's workshop. Although most of these items can be made from other materials, quivers and backpacks can only be made from leather, meaning some source of leather is almost essential for a well-rounded military. Plenty of leather can usually be acquired through trade with dwarves and humans.
Leather can also be found near groups of Rodent man in caverns. Obtaining leather this way is considered to be more dangerous and less reliable, as rodent men have blowguns coated in lethal poison.
 Leather industry
Making leather requires a tanner's shop, a raw hide or skin from an animal, and a dwarf with the tanning labor turned on. Rotten hides or skin cannot be tanned. The human and dwarven caravans usually sell various boxes of leather, which can be useful if few butcherable animals inhabit the map. One unrotten hide yields one "unit" of leather - regardless of whether the animal is a kitten or an elephant. The value of the leather depends on the critter it comes from; leather made from the skins of rare or dangerous animals can be quite valuable. Tanners turn a skin from severed part of an animal into the full-size leather.
Dwarven tanners have a skill unknown to mere humans in that they can make the softest skin of the tiniest animal equally hardy as that of the most heavily protected live creature. Whether they make flimsy skin into a rock-like substance, or tough hide silky and supple, remains a mystery.
 Leather armor
Leather armor is made in a leather works, and requires one unit of any leather. Leather is significantly lighter than other forms of armor, and thus is less likely to cause encumbrance penalties, but also provides less protection. The source animal of the leather (dragon, cat, etc.) does not alter the weight or protection of the armor, though the item quality likely does.