The engine is called Real Combat, and is designed to make you feel more in the game and in control of your character. You will not be able to set your player to auto-attack an enemy, instead you choose for every swing from what angle you wish to attack.
A character will have a stamina pool dependent on the characters statistics. Use of defensive moves, stances, combos, sprinting or special attacks will drain from your stamina pool and, if you do not have enough stamina for a special move, you will not be able to perform that move until your stamina pool has regenerated enough. This will force players to play smarter, since you will be unable to sprint after or away from your enemy if you use up the whole stamina pool at once.
In melee combat you have five different angles of attack: down against the head, diagonally down from the right, diagonally down from the left, diagonally up from the right and diagonally up from the left. Combining these angles you'll be able to create combos that can give additional damage and faster combat.
You don't choose a single target in melee combat, but instead you turn your character in the direction you wish to strike, and attack from one of the five angles. Attacking from some of these angles allows you to hit more than one enemy at a time; dealing damage to all of them. The damage of the attack will then be spread out on all the enemies that you hit.
You can get a "soft lock" on a target, but this doesn't mean that you are within range of the target. You can attack, but that doesn't mean that you will hit anything. When you strike, the underlying engine will decide whether you hit a target, several targets, or none at all.
Enemy targets display weakness points when you target them. These are shown as arc symbols (aka shields) surrounding the target in one of three locations. If an enemy has 3 shields on the left side, attacks made against that side are greatly mitigated. Attacks made to a side with fewer or no shields will inflict much higher damage. These shields do not affect magic damage.
In ranged combat you have two different ways of aiming at your enemy. You have the snipe attack where you see from a first-person perspective and you have to aim at your enemy as in FPS games. You also have the cone attack, where you see from a third-person perspective and you have a small cone in front of your player where your attacks will be aimed. The engine decides which enemy within the cone you will be firing at, depending on how straight in front of you and how close the enemy is. You also have different angles of attack in ranged combat similar to melee combat.
You will be able to fight on mounts in Age of Conan. Fighting melee from a mount gives you a higher speed and more leverage, giving you extra damage. However, your combos on a mount will be more limited than on foot.
Rangers will also be able to fight ranged from a mount. They also have different combos they can perform from a mount, but these are also limited compared to what they can do on foot.
Spellcasting is also possible from a mount, however like a Ranger, the options available are limited compared to what you could do while walking.
Magic can be done in a couple of different ways. You have regular spells which do different things, but you also have something called spellweaving. Spellweaving allows players to gather up spells in a container before they unleash the full impact of these spells, giving a much more powerful spell. However, spellweaving can backfire on the caster. Meddling with powerful magic is always a matter of sacrifice. When spellweaving more powerful spells, they can have some effect on the caster himself. The effect will depend on how powerful the spell is, and can even kill the caster.
Several casters from different classes can go together and spellweave to the same container, providing more advanced spells.
In order to cast spells your character cannot be in the air, meaning it is not possible to cast even instant spells while jumping. 
Thier are a wide array of spells in Age of Conan. For more detailed information see the Spells Portal.
Much is made of attacking in Age of Conan: Hyborian Adventures, but sometimes you have to defend yourself to survive. Active blocking is an ability available to all characters and it mitigates incoming damage. The default key to activate it is 'X'.
Double tapping the movement keys also gives short duration buffs to defense. Doing it to the Left, Right and Backwards movement keys increase defensive stats and the Forward key gives the next attack a chance to stun the target. You'll notice your character in-game doing a small jump animation to the direction you selected, and a buff icon will flash for a few seconds while it's active.
- Check out the Developer Quotes for more information on Combat.