Werewolves

Werewolves were servants of Melkor, bred from wolves and inhabited by dreadful spirits (fallen lesser Maiar or fëar of Orcs).

They were thought of by Sauron, who was their lord, and took the shape of a great wolf himself at least once. They inhabited Tol-in-Gaurhoth which became known as the Isle of Werewolves.

The first werewolf was Draugluin, and the greatest wolfhound was Carcharoth, the guardian of Angband, a descendant of Draugluin as all other werewolves were. Huan the Hound of Valinor, while also sentient, was not a werewolf.

By the Third Age, the werewolves were no more, though it is possible that the Wargs of the Third Age were descended from the werewolves, as these wolves could speak, suggesting they had fëar. Another possibility is that Sauron attempted to recreate the werewolves after his return to Middle-earth, and that the Wargs were the result.

Trivia

 * In the game The Lord of the Rings: The Battle for Middle-earth II - The Rise of the Witch-king the Angmar faction has the ability to call up a Shade of a Werewolf with three abilities; one called 'Call the Pack' which sends a rush of ice wolves at the enemy, another which freezes enemies, and another which enables the werewolf to eat helpless bystanders to recover health. Werewolves are also featured in the game The Lord of the Rings: The White Council.
 * The Middle-earth werewolves were not shapeshifters like the werewolves of European mythology &mdash; they were always in the form of beasts.
 * The name werewolf appears to have been chosen because they were in essence sentient (but evil), and thus had a status beyond that of normal wolves.