Saladin's army at Hattin was probably the largest he ever commanded, since at this time he had the resources of Syria and Upper Mesopotamia in addition to Egypt to draw on. However, his army was far short of 200,000. More realistically, Saladin's army is variously estimated in size as from 12,000 to about 40,000 (either 12,000 cavalry and the rest infantry, or mostly cavalry). Sources give Saladin's army as 12,000 regular cavalry plus many volunteers, or 80,000, or an "immense multitude". The 12,000 is the basis of the common modern estimates, with the low estimates assuming that the "many volunteers" were rather few, and the higher estimates that they were the bulk of the army. Notably, the contemporary 80,000 was accompanied by the Crusader army being 30,000 strong.

The Crusader army appears to have consisted of about 1,200 knights, perhaps about 3,000 other cavalry, and about 15,000 infantry. The "other cavalry" is variously assumed to be men-at-arms (i.e., heavy armoured cavalry) or Turcopoles (light cavalry, using the bow as their main weapon). This would make the Crusader army about 19-20,000 strong. If it is assumed that Saladin's army outnumbered them by more than two-to-one (as implied by 80,000 vs 30,000), then Saladin's army would have been at least 40,000.

However, it was a hard-fought battle, and while Saladin's army was larger, it can't have been many times larger. Thus, about 40,000 is probably the upper limit.

Noting that the left wing of Saladin's army was commanded by Gökböri, Emir of Erbil (Saladin the centre, and his nephew Taqi ad-Din the right wing), there is a good possibility that the left wing was largely made up of his own troops (plus volunteers?). In earlier battles, he had commanded armies of perhaps 5-7,000. Some sources, probably over-estimating, give the size of Saladin's right wing as "20,000 knights". Perhaps about 10,000 is a good estimate of the strength of each division (the centre and the wings) of Saladin's army. This would make his army about 30,000 strong, consisting of 12,000 regular cavalry and 18,000 volunteers. While it is sometimes assumed that the volunteers were infantry, it is likely that most were cavalry. In comparison, Saladin's army at Arsuf a few years later is usually estimated to be about 25,000, with fewer regular cavalry than at Hattin (but still mostly cavalry).

Summary: Certainly not 200,000. Probably about 30,000 - unlikely to have been under 25,000 or over 40,000.