The steel of Damascus blades, which were first encountered by the Crusaders when fighting against Muslims, had features not found in European steels--a characteristic wavy banding pattern known as damask, extraordinary mechanical properties, and an exceptionally sharp cutting edge. Here we use high-resolution transmission electron microscopy to examine a sample of Damascus sabre steel from the seventeenth century and find that it contains carbon nanotubes as well as cementite nanowires. This microstructure may offer insight into the beautiful banding pattern of the ultrahigh-carbon steel created from an ancient recipe that was lost long ago.