Ar: Abd. To the Muslim, being a slave to Allah is the highest position of honor a human can achieved. Thus a Muslim is to totally submit to God in all aspects, and to accept everything thing, whether good or evil, that comes from Him.

Muhammad himself both owned slaves and traded in slaves (cf. hadiths on black slaves). He used to sell war captives into slavery, e.g., Banu Qurayza, a Jewish tribe.

Muslims also kept slaves. Those whom they defeated and if they were not killed - were often kept or sold as slaves. For example,

The King's [i.e. Guy of Jerusalem] life was spared, but Saladin killed Reginald of Châtillon and ordered the execution of some 200 Templars and Hospitallers. Other captive knights were treated honourably, and most were later ransomed. Less fortunate were the foot soldiers, most of whom were sold into slavery.
Jerusalem, ... capitulated to Saladin, who agreed to allow the inhabitants to leave after paying a ransom. Though Saladin offered to release the poor for a specified sum, several thousand apparently were not redeemed and probably were sold into slavery. (Encyclopaedia Britannica Online)


Further reading:

Book recommendation:

  Bernard Lewis
  Race and Slavery in the Middle East : A Historical Enquiry
  Oxford University Press, 1990, 184 pages, ISBN 0-19-505326-5

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