The story of Charmed begins with the three Halliwell sisters — Prue, Piper and Phoebe - coming together six months after the death of their grandmother. Moving back into the family Manor in San Francisco, the youngest sister, Phoebe, discovers an old book — the Book of Shadows — in the attic. Reading an incantation from it, she unwittingly sets in motion events that fulfill an ancient prophecy. Strange and harrowing occurrences begin which eventually leads the sisters to realize that they are witches.

They discover that not only do they possess supernatural powers, but also come from a long line of powerful witches. The first in the line, Melinda Warren, was burned at the stake in the Salem Witch Trials. However, before she died, Melinda prophesied that each coming generation of Warren (later Halliwell) witches would grow stronger and stronger, culminating in the arrival of three sisters -- the strongest good witches the world had ever seen; the three sisters would form The Power of Three, the most powerful magical force ever.

Prue Halliwell, the oldest sister, develops the power of telekinesis and can move things with her mind. She later gains the power of astral projection, where she can make a clone of herself appear wherever she desires. Piper, the middle child, receives the power to freeze molecules and stop time. This power later evolves so that she can blow things up: molecular combustion. Phoebe, the youngest sister, receives the passive power of premonition, which allows her to see see future events (and later past events as well). She eventually obtains the active power to levitate, which is useful when used in combination with her martial arts skills. Her empathic powers develop in late in the series, allowing her to read others' emotions and affect the supernatural powers of other beings whose powers are tied to their emotions, allowing her to "rebound" the attacks of certain demons.

After the tragic and unexpected death of Prue, it is revealed that the sisters have a younger half-sister named Paige, born to their mother Patty and Sam, her Whitelighter, a guardian angel for witches. As this type of relationship was forbidden and unheard of at the time, they gave the baby to a nun and the Matthews family later adopted her. Her birth parents requested only that her first name begin with 'P', to continue the tradition. From her Whitelighter father, Paige inherits the power to "orb". This also has an effect on the powers she inherits from Patty: instead of telekinesis, Paige is able to call for an object; the object in question will then orb to her or to any location she wishes. Though this power requires the use of verbal commands, she has been able to do so silently when in a state of enhanced power, and in a few other instances. This power is called telekinetic orbing. In Season 5, Paige reveals that she also has other Whitelighter powers, such as glamouring. Halfway through Season 8, Paige develops more of her Whitelighter side by being able to heal and locate charges by sensing them.

A central theme throughout the show's run is the sisters' struggle to balance their normal lives with their supernatural responsibilities. The burden of keeping their destinies a secret from the outside world has repeatedly created tensions in their friendships, workplaces, and romantic relationships. Only a few know their secret and help them on a regular basis. The most important is Leo Wyatt, a Whitelighter assigned by the Elders to guide and protect the sisters. Leo means a great deal to the sisters both professionally and personally: he heals their wounds, advises them collectively and individually, and mediates between them and the enigmatic Elders. He also becomes the love of Piper's life, her husband and father of her children. Others who keep the Charmed Ones' secret over the years include policemen Andy Trudeau and Darryl Morris, tormented half-demon Cole Turner, the mysterious time-traveler Chris Perry, sisters Christy and Billie Jenkins, Paige's husband, Henry Mitchell, and many others.