Heres a list of unlockable characters in Final Fantasy Tactics. Keep in mind that each character is acquired in the fourth chapter, and that you must have Mustadio in your party for each character to appear. Otherwise, you wont have the opportunity to recruit any characters.

Balthier - After you see the cutscene during chapter four at Bervenia, read the rumors at the pub in Gollund. From there, travel to Dorter, and do the same thing you did in Gollund. When you leave Dorter from there, youll automatically engage in a battle. If youre victorious, Balthier will join the party permanently. (Submitted by Leo)

Beowulf - Read the rumors at Goland, and then head to Lesalia. There, you will find Beowulf, and can agree to accompany him to Goland. After a series of plot battles, he joins the party.

Biblos - After clearing all ten levels of the Deep Dungeon, this character will become available for recruitment.

Cloud - After returning Reis to human form, go to Goug. Cloud (of Final Fantasy VII fame) will run off to Zarghidas. After clearing Igros, go to Zargidas and win the fight to recruit this character.

Construct 8 - After rescuing Reis from Goland, return to Goug. Worker 8 joins the party after a cutscene.

Dragon Reis - Go with Beowulf through Goland Coal City. Reis is rescued during the final battle in the series, and will join the party thereafter.

Human Reis - First, read the rumors at Zeltennia, and then buy a flower in Zarghidas. From there, return to Goug. This unlocks a battle in Zeltennia, where Reis takes human form at the fights conclusion.