Xypher is the son of the Greek dream god Phobetor and a Sumerian demoness. He was raised by demons until he manifested his Dream-Hunter powers, at which point he was taken to Olympus. He was an Oneroi until Satara seduced him and convinced him to haunt her enemies' dreams. As a Phobotory Skotos, he was adept at instilling fear in others. He drove them insane and they turned on their families, then killed themselves. The other gods found out that Satara was behind this and were going to kill her, but Xypher took the blame instead. He traded his soul to Jaden in exchange for making everyone believe that Xypher was solely responsible for the crimes. It took 11 Oneroi to kill him and send him to Tartarus. Xypher suffered centuries of torture in Tartarus until Katra Agrotera negotiated his release in Devil May Cry. For his assistance, he earned one month of freedom as a human. If he could prove that he'd reformed, he would gain his freedom forever as a human. He dragged a demon to Katra's room and made him tell her that Kessar wore the Tablet of Destiny around his neck and had Zakar pinned to the side of his throne. Then he himself was caught by Kessar but later freed by Zakar with a message to Sin. He helped Sin and Katra read a bunch of Sumerian scrolls for information then helped keep the Dimme locked up.
But Xypher didn't want freedom; he wanted revenge. In Dream Chaser, he was trying to find a way into Kalosis to kill Satara when he interrupted a Daimon attack on Simone Dubois. Satara, who knew Xypher was looking for her, sent some of her brother Stryker's Spathi Daimons into the fight. They attached deamarkonians to both Xypher and Simone. These were an Atlantean invention that bound a stronger being to a weaker one. In this case, Satara's plan was to bind the half-god, half-demon Xypher to a human being and kill her, thereby killing him as well. Luckily, Simone was actually half-Dimme, so she was more difficult to kill than the average human.
Xypher made another deal with Jaden to remove the deamarkonians and restore his full powers, which Hades had restricted. The price was the Dorean Squire Liza's amulet, which has the power to paralyze a god. After they were unbound, Xypher stayed with Simone because they were falling in love. When he finally made it to Kalosis, he called a truce with Satara instead of killing her because his main priority had shifted from vengeance to Simone's protection. Satara demanded that Xypher kill himself instead and promised not to harm Simone. Before he could commit suicide, Satara stabbed him in the heart. He died, but Hades released him from Tartarus because Xypher's sacrifice on behalf of Simone proved that he had reformed.