Whenever you pick-up or purchase an item it will be added to your inventory. To view the items in your inventory, just point your mouse at the backpack icon in the top right corner of the screen. Your inventory has 30 slots available. Large items will take up one inventory slot each. Small items such as money can all be stored in just one slot, in which case a yellow number at the top left of the slot indicates how many of that item you are currently holding.
To use an item you are holding, open your inventory, and then click on the item you wish to use. You can then click on another item or person to use the two together. To drop an item you are holding, select the "drop" option, and then click on an empty spot on the ground, and your character will attempt to place it where you indicated.
Armour and weapons are an important aspect of the game. The weaponary you are wielding can often make the difference between winning and losing a battle. To wield a weapon you must first be holding it, then just open your inventory and click on the item you wish to wear or hold. The background will turn red to indicate the item is being worn.