In the early history of the galaxy, the powers of the Warp had yet to form into distinct, intelligent entities. At this time, the emotions of sentient mortals flowed and ebbed as water does in a stream. As the intelligent mortal races grew and prospered, so did the strength of their emotions. Eventually, the Gods grew to such a point where they could act independently of the general flow of emotions and thus became the Gods of Chaos. They reached into the dreams of mortals and demanded praise and servitude in order to increase their own power, as the more one emotion is exhibited (in both thought and action) by a large group of sentient beings in the physical universe, the stronger that Chaos God becomes.

The Chaos Gods are able to devote a fraction of their psychic power in the Warp to create daemons, whose appearance and character reflect their patron God's own nature. These daemons may be reabsorbed into the God at their whim. The least of the minor Gods may be so limited in their power that expending that power to create a daemon means their entire power is expended; in effect, the God becomes a daemon.