diff --git a/lang/en.json b/lang/en.json
index ddd6a3c4..be0bdd91 100755
--- a/lang/en.json
+++ b/lang/en.json
@@ -207,6 +207,12 @@
                 "Session": "Session",
                 "Shortrest": "Short Rest",
                 "Longrest": "Long Rest"
+            },
+            "Damage": {
+                "Severe": "Severe",
+                "Major": "Major",
+                "Minor": "Minor",
+                "None": "None"
             }
         },
         "ActionType": {
@@ -1084,6 +1090,16 @@
             "Title": "Ownership Selection - {name}",
             "Default": "Default Ownership"
         },
+        "DamageReduction": {
+            "Title": "Damage Reduction",
+            "ArmorMarks": "Armor Marks",
+            "UsedMarks": "Used Marks",
+            "Stress": "Stress",
+            "Notifications": {
+                "DamageAlreadyNone": "The damage has already been reduced to none",
+                "NotEnoughArmor": "You don't have enough unspent armor marks"
+            }
+        },
         "Sheets": {
             "PC": {
                 "Name": "Name",
diff --git a/module/applications/damageReductionDialog.mjs b/module/applications/damageReductionDialog.mjs
new file mode 100644
index 00000000..3783560c
--- /dev/null
+++ b/module/applications/damageReductionDialog.mjs
@@ -0,0 +1,112 @@
+import { getDamageLabel } from '../helpers/utils.mjs';
+
+const { ApplicationV2, HandlebarsApplicationMixin } = foundry.applications.api;
+
+export default class DamageReductionDialog extends HandlebarsApplicationMixin(ApplicationV2) {
+    constructor(resolve, reject, actor, damage) {
+        super({});
+
+        this.resolve = resolve;
+        this.reject = reject;
+        this.actor = actor;
+        this.damage = damage;
+
+        this.availableArmorMarks = {
+            max: actor.system.rules.maxArmorMarked.total + (actor.system.rules.stressExtra ?? 0),
+            maxUseable: actor.system.armorScore - actor.system.armor.system.marks.value,
+            stressIndex:
+                (actor.system.rules.stressExtra ?? 0) > 0 ? actor.system.rules.maxArmorMarked.total : undefined,
+            selected: 0
+        };
+    }
+
+    get title() {
+        return game.i18n.localize('DAGGERHEART.DamageReduction.Title');
+    }
+
+    static DEFAULT_OPTIONS = {
+        tag: 'form',
+        classes: ['daggerheart', 'views', 'damage-reduction'],
+        position: {
+            width: 240,
+            height: 'auto'
+        },
+        actions: {
+            setMarks: this.setMarks,
+            takeDamage: this.takeDamage
+        },
+        form: {
+            handler: this.updateData,
+            submitOnChange: true,
+            closeOnSubmit: false
+        }
+    };
+
+    /** @override */
+    static PARTS = {
+        damageSelection: {
+            id: 'damageReduction',
+            template: 'systems/daggerheart/templates/views/damageReduction.hbs'
+        }
+    };
+
+    /* -------------------------------------------- */
+
+    /** @inheritDoc */
+    get title() {
+        return `Damage Options`;
+    }
+
+    async _prepareContext(_options) {
+        const context = await super._prepareContext(_options);
+        context.armorScore = this.actor.system.armorScore;
+        context.armorMarks = this.actor.system.armor.system.marks.value + this.availableArmorMarks.selected;
+        context.availableArmorMarks = this.availableArmorMarks;
+
+        context.damage = getDamageLabel(this.damage);
+        context.reducedDamage =
+            this.availableArmorMarks.selected > 0
+                ? getDamageLabel(this.damage - this.availableArmorMarks.selected)
+                : null;
+
+        return context;
+    }
+
+    static updateData(event, _, formData) {
+        const form = foundry.utils.expandObject(formData.object);
+        this.render(true);
+    }
+
+    static setMarks(_, target) {
+        const index = Number(target.dataset.index);
+        if (index >= this.availableArmorMarks.maxUseable) {
+            ui.notifications.info(game.i18n.localize('DAGGERHEART.DamageReduction.Notifications.NotEnoughArmor'));
+            return;
+        }
+
+        const isDecreasing = index < this.availableArmorMarks.selected;
+        if (!isDecreasing && this.damage - this.availableArmorMarks.selected === 0) {
+            ui.notifications.info(game.i18n.localize('DAGGERHEART.DamageReduction.Notifications.DamageAlreadyNone'));
+            return;
+        }
+
+        this.availableArmorMarks.selected = isDecreasing ? index : index + 1;
+        this.render();
+    }
+
+    static async takeDamage() {
+        const armorSpent = this.availableArmorMarks.selected;
+        const modifiedDamage = this.damage - armorSpent;
+
+        this.resolve({ modifiedDamage, armorSpent });
+        await this.close(true);
+    }
+
+    async close(fromSave) {
+        if (!fromSave) {
+            this.reject();
+        }
+
+        await super.close({});
+    }
+}
diff --git a/module/data/actor/character.mjs b/module/data/actor/character.mjs
index 273b7a72..13ded6a7 100644
--- a/module/data/actor/character.mjs
+++ b/module/data/actor/character.mjs
@@ -83,6 +83,18 @@ export default class DhCharacter extends BaseDataActor {
                 attack: new fields.NumberField({ integer: true, initial: 0 }),
                 spellcast: new fields.NumberField({ integer: true, initial: 0 }),
                 armorScore: new fields.NumberField({ integer: true, initial: 0 })
+            }),
+            rules: new fields.SchemaField({
+                maxArmorMarked: new fields.SchemaField({
+                    value: new fields.NumberField({ required: true, integer: true, initial: 1 }),
+                    bonus: new fields.NumberField({ required: true, integer: true, initial: 0 }),
+                    stressExtra: new fields.NumberField({ required: true, integer: true, initial: 0 })
+                }),
+                stressDamageReduction: new fields.SchemaField({
+                    enabled: new fields.BooleanField({ required: true, initial: false }),
+                    cost: new fields.NumberField({ integer: true }),
+                    fromSeverity: new fields.NumberField({ integer: true, max: 3 })
+                })
             })
         };
     }
@@ -232,6 +244,9 @@ export default class DhCharacter extends BaseDataActor {
             experience.total = experience.value + experience.bonus;
         }
 
+        this.rules.maxArmorMarked.total = this.rules.maxArmorMarked.value + this.rules.maxArmorMarked.bonus;
+
+        this.armorScore = this.armor ? this.armor.system.baseScore + (this.bonuses.armorScore ?? 0) : 0;
         this.resources.hitPoints.maxTotal = this.resources.hitPoints.max + this.resources.hitPoints.bonus;
         this.resources.stress.maxTotal = this.resources.stress.max + this.resources.stress.bonus;
         this.evasion.total = (this.class?.evasion ?? 0) + this.evasion.bonus;
diff --git a/module/data/item/armor.mjs b/module/data/item/armor.mjs
index b0fdf0ae..c7f5af0b 100644
--- a/module/data/item/armor.mjs
+++ b/module/data/item/armor.mjs
@@ -29,7 +29,6 @@ export default class DHArmor extends BaseDataItem {
                 })
             ),
             marks: new fields.SchemaField({
-                max: new fields.NumberField({ initial: 6, integer: true }),
                 value: new fields.NumberField({ initial: 0, integer: true })
             }),
             baseThresholds: new fields.SchemaField({
diff --git a/module/documents/actor.mjs b/module/documents/actor.mjs
index 3b5fe734..02643c04 100644
--- a/module/documents/actor.mjs
+++ b/module/documents/actor.mjs
@@ -4,6 +4,7 @@ import RollSelectionDialog from '../applications/rollSelectionDialog.mjs';
 import { GMUpdateEvent, socketEvent } from '../helpers/socket.mjs';
 import { setDiceSoNiceForDualityRoll } from '../helpers/utils.mjs';
 import DHDualityRoll from '../data/chat-message/dualityRoll.mjs';
+import DamageReductionDialog from '../applications/damageReductionDialog.mjs';
 
 export default class DhpActor extends Actor {
     async _preCreate(data, options, user) {
@@ -266,21 +267,21 @@ export default class DhpActor extends Actor {
      */
     async diceRoll(config, action) {
         // console.log(config)
-        config.source = {...(config.source ?? {}), actor: this.id};
+        config.source = { ...(config.source ?? {}), actor: this.id };
         const newConfig = {
             // data: {
-                ...config,
-                /* action, */
-                // actor: this.getRollData(),
-                actor: this.system
+            ...config,
+            /* action, */
+            // actor: this.getRollData(),
+            actor: this.system
             // },
             // options: {
-                // dialog: false,
+            // dialog: false,
             // },
             // event: config.event
-        }
+        };
         // console.log(this, newConfig)
-        const roll = CONFIG.Dice.daggerheart[this.type === 'character' ? 'DualityRoll' : 'D20Roll'].build(newConfig)
+        const roll = CONFIG.Dice.daggerheart[this.type === 'character' ? 'DualityRoll' : 'D20Roll'].build(newConfig);
         return config;
         /* let hopeDice = 'd12',
             fearDice = 'd12',
@@ -508,67 +509,67 @@ export default class DhpActor extends Actor {
     async takeDamage(damage, type) {
         const hpDamage =
             damage >= this.system.damageThresholds.severe
-                ? -3
+                ? 3
                 : damage >= this.system.damageThresholds.major
-                  ? -2
+                  ? 2
                   : damage >= this.system.damageThresholds.minor
-                    ? -1
+                    ? 1
                     : 0;
-        await this.modifyResource([{value: hpDamage, type}]);
-        /* const update = {
-            'system.resources.hitPoints.value': Math.min(
-                this.system.resources.hitPoints.value + hpDamage,
-                this.system.resources.hitPoints.max
-            )
-        };
 
-        if (game.user.isGM) {
-            await this.update(update);
-        } else {
-            await game.socket.emit(`system.${SYSTEM.id}`, {
-                action: socketEvent.GMUpdate,
-                data: {
-                    action: GMUpdateEvent.UpdateDocument,
-                    uuid: this.uuid,
-                    update: update
-                }
+        if (
+            this.type === 'character' &&
+            this.system.armor &&
+            this.system.armor.system.marks.value < this.system.armorScore
+        ) {
+            new Promise((resolve, reject) => {
+                new DamageReductionDialog(resolve, reject, this, hpDamage).render(true);
+            }).then(async ({ modifiedDamage, armorSpent }) => {
+                const resources = [
+                    { value: modifiedDamage, type: 'hitPoints' },
+                    ...(armorSpent ? [{ value: armorSpent, type: 'armorStack' }] : [])
+                ];
+                await this.modifyResource(resources);
             });
-        } */
+        } else {
+            await this.modifyResource([{ value: hpDamage, type: 'hitPoints' }]);
+        }
     }
 
     async modifyResource(resources) {
-        if(!resources.length) return;
-        let updates = { actor: { target: this, resources: {} }, armor: { target: this.armor, resources: {} } };
+        if (!resources.length) return;
+        let updates = { actor: { target: this, resources: {} }, armor: { target: this.system.armor, resources: {} } };
         resources.forEach(r => {
-            switch (type) {
-                case 'armorStrack':
-                    // resource = 'system.stacks.value';
-                    // target = this.armor;
-                    // update = Math.min(this.marks.value + value, this.marks.max);
-                    updates.armor.resources['system.stacks.value'] = Math.min(this.marks.value + value, this.marks.max);
+            switch (r.type) {
+                case 'armorStack':
+                    updates.armor.resources['system.marks.value'] = Math.min(
+                        this.system.armor.system.marks.value + r.value,
+                        this.system.armorScore
+                    );
                     break;
                 default:
-                    // resource = `system.resources.${type}`;
-                    // target = this;
-                    // update = Math.min(this.resources[type].value + value, this.resources[type].max);
-                    updates.armor.resources[`system.resources.${type}`] = Math.min(this.resources[type].value + value, this.resources[type].max);
+                    updates.actor.resources[`system.resources.${r.type}.value`] = Math.min(
+                        this.system.resources[r.type].value + r.value,
+                        this.system.resources[r.type].max
+                    );
                     break;
             }
-        })
-        Object.values(updates).forEach(async (u) => {
-            if (game.user.isGM) {
-                await u.target.update(u.resources);
-            } else {
-                await game.socket.emit(`system.${SYSTEM.id}`, {
-                    action: socketEvent.GMUpdate,
-                    data: {
-                        action: GMUpdateEvent.UpdateDocument,
-                        uuid: u.target.uuid,
-                        update: u.resources
-                    }
-                });
+        });
+        Object.values(updates).forEach(async u => {
+            if (Object.keys(u.resources).length > 0) {
+                if (game.user.isGM) {
+                    await u.target.update(u.resources);
+                } else {
+                    await game.socket.emit(`system.${SYSTEM.id}`, {
+                        action: socketEvent.GMUpdate,
+                        data: {
+                            action: GMUpdateEvent.UpdateDocument,
+                            uuid: u.target.uuid,
+                            update: u.resources
+                        }
+                    });
+                }
             }
-        })
+        });
     }
 
     /* async takeHealing(healing, type) {
diff --git a/module/helpers/utils.mjs b/module/helpers/utils.mjs
index 1e12e430..dc1601ad 100644
--- a/module/helpers/utils.mjs
+++ b/module/helpers/utils.mjs
@@ -235,3 +235,16 @@ Roll.replaceFormulaData = function (formula, data, { missing, warn = false } = {
     formula = terms.reduce((a, c) => a.replaceAll(`@${c.term}`, data[c.term] ?? c.default), formula);
     return nativeReplaceFormulaData(formula, data, { missing, warn });
 };
+
+export const getDamageLabel = damage => {
+    switch (damage) {
+        case 3:
+            return game.i18n.localize('DAGGERHEART.General.Damage.Severe');
+        case 2:
+            return game.i18n.localize('DAGGERHEART.General.Damage.Major');
+        case 1:
+            return game.i18n.localize('DAGGERHEART.General.Damage.Minor');
+        case 0:
+            return game.i18n.localize('DAGGERHEART.General.Damage.None');
+    }
+};
diff --git a/styles/daggerheart.css b/styles/daggerheart.css
index 44e011ee..387c7c75 100755
--- a/styles/daggerheart.css
+++ b/styles/daggerheart.css
@@ -3113,6 +3113,80 @@ div.daggerheart.views.multiclass {
 .daggerheart.views.ownership-selection .ownership-outer-container .ownership-container select {
   margin: 4px 0;
 }
+.daggerheart.views.damage-reduction .window-content {
+  padding: 8px 0;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container {
+  display: flex;
+  flex-direction: column;
+  align-items: center;
+  gap: 4px;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .section-container {
+  display: flex;
+  flex-direction: column;
+  align-items: center;
+  width: 100%;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .padded {
+  padding: 0 8px;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .armor-title {
+  margin: 0;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .mark-selection {
+  display: flex;
+  align-items: center;
+  gap: 4px;
+  width: 100%;
+  margin: 0;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .mark-selection .mark-container {
+  cursor: pointer;
+  border: 1px solid light-dark(#18162e, #f3c267);
+  border-radius: 6px;
+  height: 26px;
+  width: 26px;
+  font-size: 18px;
+  display: flex;
+  align-items: center;
+  justify-content: center;
+  opacity: 0.4;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .mark-selection .mark-container.selected {
+  opacity: 1;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .mark-selection .mark-container.disabled {
+  cursor: initial;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .markers-subtitle {
+  margin: -4px 0 0 0;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .markers-subtitle.bold {
+  font-variant: all-small-caps;
+  font-weight: bold;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .damage-container {
+  display: flex;
+  justify-content: center;
+  gap: 4px;
+  font-weight: bold;
+  height: 18px;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .damage-container i {
+  font-size: 18px;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container .damage-container .reduced-value {
+  opacity: 0.4;
+  text-decoration: line-through;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container footer {
+  display: flex;
+  width: 100%;
+}
+.daggerheart.views.damage-reduction .damage-reduction-container footer button {
+  flex: 1;
+}
 :root {
   --shadow-text-stroke: -1px -1px 0 #000, 1px -1px 0 #000, -1px 1px 0 #000, 1px 1px 0 #000;
   --fear-animation: background 0.3s ease, box-shadow 0.3s ease, border-color 0.3s ease, opacity 0.3s ease;
diff --git a/styles/daggerheart.less b/styles/daggerheart.less
index 9094d312..32317832 100755
--- a/styles/daggerheart.less
+++ b/styles/daggerheart.less
@@ -11,6 +11,7 @@
 @import './characterCreation.less';
 @import './levelup.less';
 @import './ownershipSelection.less';
+@import './damageReduction.less';
 @import './resources.less';
 @import './countdown.less';
 @import './settings.less';
diff --git a/styles/damageReduction.less b/styles/damageReduction.less
new file mode 100644
index 00000000..723a7022
--- /dev/null
+++ b/styles/damageReduction.less
@@ -0,0 +1,91 @@
+.daggerheart.views.damage-reduction {
+    .window-content {
+        padding: 8px 0;
+    }
+
+    .damage-reduction-container {
+        display: flex;
+        flex-direction: column;
+        align-items: center;
+        gap: 4px;
+
+        .section-container {
+            display: flex;
+            flex-direction: column;
+            align-items: center;
+            width: 100%;
+        }
+
+        .padded {
+            padding: 0 8px;
+        }
+
+        .armor-title {
+            margin: 0;
+        }
+
+        .mark-selection {
+            display: flex;
+            align-items: center;
+            gap: 4px;
+            width: 100%;
+            margin: 0;
+
+            .mark-container {
+                cursor: pointer;
+                border: 1px solid light-dark(#18162e, #f3c267);
+                border-radius: 6px;
+                height: 26px;
+                width: 26px;
+                font-size: 18px;
+                display: flex;
+                align-items: center;
+                justify-content: center;
+                opacity: 0.4;
+
+                &.selected {
+                    opacity: 1;
+                }
+
+                &.disabled {
+                    cursor: initial;
+                }
+            }
+        }
+
+        .markers-subtitle {
+            margin: -4px 0 0 0;
+
+            &.bold {
+                font-variant: all-small-caps;
+                font-weight: bold;
+            }
+        }
+
+        .damage-container {
+            display: flex;
+            justify-content: center;
+            gap: 4px;
+            font-weight: bold;
+            height: 18px;
+
+            i {
+                font-size: 18px;
+            }
+
+            .reduced-value {
+                opacity: 0.4;
+                text-decoration: line-through;
+            }
+        }
+
+        footer {
+            display: flex;
+            width: 100%;
+
+            button {
+                flex: 1;
+            }
+        }
+    }
+}
diff --git a/templates/views/damageReduction.hbs b/templates/views/damageReduction.hbs
new file mode 100644
index 00000000..0fcc47b0
--- /dev/null
+++ b/templates/views/damageReduction.hbs
@@ -0,0 +1,40 @@
+<div class="damage-reduction-container">
+    <div class="section-container padded">
+        <h4 class="armor-title">{{localize "DAGGERHEART.DamageReduction.ArmorMarks"}}</h4>
+        <div class="markers-subtitle">{{armorMarks}}/{{armorScore}}</div>
+    </div>
+    
+    <div class="section-container">
+        <h4 class="mark-selection divider">
+            {{#times availableArmorMarks.max}}
+                <div 
+                    class="mark-container {{#if (lt this @root.availableArmorMarks.selected)}}selected{{/if}} {{#if (gte this this.maxUseable)}}disabled{{/if}}" 
+                    data-action="setMarks" data-index="{{this}}"
+                >
+                    {{#if (or (not @root.availableArmorMarks.stressIndex) (lt this @root.availableArmorMarks.stressIndex))}}
+                        <i class="fa-solid fa-shield"></i>
+                    {{else}}
+                        <i class="fa-solid fa-bolt"></i>
+                    {{/if}}
+                    
+                </div>
+            {{/times}}
+        </h4>
+        <div class="markers-subtitle bold">{{localize "DAGGERHEART.DamageReduction.UsedMarks"}}</div>
+    </div>
+
+    <div class="section-container">
+        <div>{{localize "Incoming Damage"}}</div>
+        <div class="damage-container">
+            <div class="{{#if this.reducedDamage}}reduced-value{{/if}}">{{this.damage}}</div>
+            {{#if this.reducedDamage}}
+                <i class="fa-solid fa-arrow-right-long"></i>
+                <div>{{this.reducedDamage}}</div>
+            {{/if}}
+        </div>
+    </div>
+
+    <footer class="padded">
+        <button type="button" data-action="takeDamage">{{localize "Take Damage"}}</button>
+    </footer>
+</div>
\ No newline at end of file