In the original Diablo I manual, Inarius was only introduced as a means of explaining the origins of the Overlord demon encountered by the player in the Catacombs and Caves levels of the game. The angel left Heaven because of his pride, and built himself a temple. To prove his superiority he launched an ill-fated assault upon one of the temples of Mephisto and slew all his followers. Mephisto was greatly angered by Inarius's actions, and captured the angel and his followers.
From the Diablo manual:
He bound Inarius with tremendous chains and slowly tore the wings from the back of the angel. Great barbed hooks were then used to stretch out the once glowing skin and his features were distorted by vile powers. Many of the followers of Inarius were given as gifts to Baal and Diablo, but the rest were molded to match the bloated image of the now crippled angel. To this day, Inarius is said to be trapped in Hell within a chamber of mirrors, his eyelids torn from his face as he is forced to gaze upon his misshapen form for all eternity. His misguided followers now serve as Hell's taskmaster taking the anguish of their lost glory out upon the bodies of others.
In later writings it was said that Inarius lead a group of like minded angles and demons who were tired of the endless war to create Sanctuary. On Sanctuary he and a demon by the name Lilith (daughter to Mephisto) gave birth to a son by the name Rathma. All of the offspring of the angles and demons were named Nephalem. The Nephalem had both the power of their parents and could one day be more powerful then Inarius himself. To prevent anyone from overthrowing him he altered the Worldstone to weaken the nephalems. In time though Inarius was defeted and a pact was made between Mephisto and the Angiris Council. Mephisto swore to leave Sanctuary never to return in exchange for Inarius and his followers.