Guard is the way to defend in the Tekken games, it is accomplished my tilting the analog stick in the opposite direction of the enemy, if it's diagonally down then you accomplish a "Down Guard". You can also guard if you are standing still.
Although guard is a defensive position, it can easily be broken by either doing an Unblockable or a Grab. They can also be broken if the player does a Low-Attack on a normal guard or a High-Attack or Mid-Attack on a down guard.
The player can also choose to have guards not fully nulify the damage in the Options menu.