PlayStation

Xenogears

I'm in the final chapter of the game and would like to know if I should equip all characters and their gears with the best equipment or not. Do I fight the final boss with only three characters?

You should absolutely equip all characters.

Theoretically, you can just go to the final boss and engage him in battle with just three guys. But winning would be nearly impossible. The area near the final boss is inhabited by three (or even four? I don't remember) "helpers", each of which adds an ability or attack to the final boss. If such helper is defeated, the final boss won't be able to use the corresponding ability. With all his abilities intact, he acts as many times per round, essentially wiping out your party.

Now, you'll have to decide what to do. Ignoring the helpers and going straight for the final guy would be suicide. However, killing all the helpers would mean to have used all your characters before the final battle without any possibility to heal, which would leave the weakened party very vulnerable.

My advice is to make a compromise: defeat just two of the helpers. Go for the yellow one first, because he is responsible for the final boss' healing spell. Save your best characters for the final fellow.