Prophet Muhammad (saw) was kind to every living creature and this kindness knew no limits. He was very kind to animals as well. Arabs, like all ignorant and illiterate people, were very unkind to their animals. It was very common in Arabia to put a collar round the neck of a camel, but this practice was stopped on the Prophet's orders. People used to cut pieces of flesh from living animals and cook and eat them. This common practice was forbidden.

It was also forbidden to shear their hair or tails. Prophet Muhammad (saw) said that the tail was the brush and fan of these animals and hair was their quilt. He also forbade people to keep animals tied to their working equipment for a long time and said, "Don't make the backs of animals your chairs." Animal fights were also made unlawful. Another custom was to tie up an animal and practise arrow shooting on it. This was also prohibited.

Once Prophet Muhammad (saw) saw a donkey on the road with a brand on its face, and said, "Allah's curse is on him who branded it." As people had to brand their camels and sheep in order to identify them, they were told to brand them on parts which were not so tender. Anas (ra) reported that he went into a herd of sheep and saw Allah's Messenger (saw) branding them on the ears.

Once the Prophet (saw) was on a journey with his companions and they stopped for rest at a certain place. A bird had laid an egg there. A man took away the egg and the bird began beating her wings in a state of great distress. The Prophet (saw) inquired who had hurt her by taking her egg. When the man admitted that he had done that, the Prophet (saw) asked him to return the egg to the nest.

Further Reading: Prophet Muhammad (p), a Mercy for All Creatures An In-Depth Look at Zabiha (i.e., slaughtered animals) - Mufti Ebrahim Desai
Animals in Islam
Hidden Dangers of Dog Stroking - BBC News
Islam and the Animal Kingdom
The Dog is an Impure Animal - Mufti Muhammad Kadwa
The Ritual Islamic Slaughter - Mufti Ebrahim Desai