I played a game a long time ago where one of the character classes was a ninja or monk, who actually received a combat penalty if they used a weapon. They started off a little weak, but with the right training could do more damage unarmed than the warrior and paladin type classes.
This sounds very much like Hellfire, the expansion for the first Diablo. It introduced two new characters, one of them a monk. He only fought hand to hand and he was pretty tough.