Diablo is one of the three Prime Evils of the Burning Hells. As the Lord of Terror, he is responsible for all of humanities fears, and filling humans with bloodlust. Although Diablo is younger than his two brothers, he is the strongest, and essentially the de-facto leader of the three.
Before the events of the first game, Diablo and his two brothers were captured and imprisoned in soulstones by mages of the Horadrim. Diablo’s soulstone was then taken to the cathedral in the town of Tristram where it was stored in vast and dark labyrinth beneath to be forgotten. Two centuries would pass since Diablo and his brothers were imprisoned, and the people of Khanduras had all but forgotten about the Prime Evils and their reign of terror.
However, little did anyone suspect that Diablo spent these centuries corrupting the very soulstone that imprisoned him, for although Diablo was imprisoned, he was not completely powerless. Reaching out with his mind, Diablo attempted to corrupt the archbishop, Lazarus, and even the very ruler of Khanduras, King Leoric. While Lazurus proved to be easy to corrupt, Diablo was unable to completely possess Leoric, slowly driving him mad in the process. Using his terrible influence, Diablo ordered Lazarus to kidnap the son of King Leoric, Albrecht, and bring him to the very cathedral where Diablo was imprisoned in Tristram.
Leoric, already a shell of his former self, rashly led expeditions into the labyrinth to find Albrect. None of them expected the dangers that awaited them in the labyrinth. Lazarus shoved the soulstone containing Diablo into the forehead of Prince Albrect, which allowed Diablo to completely take over his mind and body. Albrect’s body transformed into a hellish monstrosity as Diablo had finally re-manifested himself in the physical world. Diablo then corrupted the very labyrinth that imprisoned him, calling forth legions of the undead and demons from the Burning Hells. Leoric’s expedition was caught completely off guard, leading to the deaths or corruption of nearly everyone that ventured into the dark labyrinth beneath Tristram, including Leoric himself who lost whatever was left of his sanity and becoming the Skeleton King.
Adventurers from around the world ventured to Tristram for a chance to face the evils of the labyrinth. One of these heroes - King Leoric's eldest son, Prince Aidan - would eventually make it to the sixteenth and final level of the labyrinth. A battle ensued between Diablo and Aidan, with the prince eventually emerging victorious. However, though Diablo was slain, his soulstone remained, thus he was not truly vanquished. If left alone, Diablo would simply do the same thing again in the future. Beleving it to be the only course of action left, Prince Aidan plunged the soulstone into his forehead beliving himself to be strong enough to control Diablo. However, this is exactly what Diablo was counting on.
When Aidan emerged from the labyrinth, he was acting noticeably different. He would constantly have nightmares about “The East,” feeling a strong urge to go there. Eventually, the prince left Tristram to go east. Shortly after he left, Tristram was overrun by demons and hellspawn, slaying nearly everyone in the town. Prince Aidan, known now as “The Wanderer,” was slowly being possessed by Diablo, and Diablo was using him to go east in order to free his two brothers: Mephisto and Baal. Everywhere The Wanderer went, destruction followed in his wake. Eventually, a group of adventures banded together with the goal of chasing The Wanderer and stopping whatever Diablo was planning.
They always arrived too late, however. The Wanderer was able to free Baal from Tal Rasha’s tomb located beneath the vast deserts of Aranoch, and then succeeded in freeing the eldest brother, Mephisto, in the Jungles of Kurast. Diablo, now fully in control of the hero’s body, transformed it into the hellish monstrosity that was Diablo’s true form. He then traveled to Hell, with the adventures in hot pursuit. The adventures eventually reached Kurast and slew Mephisto, who was guarding the portal to hell.
The adventures arrived at the Pandemonium fortress, the only part of hell controlled by the forces of light. The adventures battled their way through hell, eventually reaching Diablo’s Chaos Sanctuary. There, the heroes did battle with the Lord of Terror, eventually besting him in battle. Diablo was defeated once more. Being careful not to repeat the same mistake again, Diablo’s soulstone was taken to the hellforge where it was destroyed, seemingly putting an end to Diablo permanently.
It is unclear what role Diablo will play in Diablo III.