The story of Charmed begins with the three Halliwell sisters — Prudence, Piper and Phoebe — coming together six months after the death of their grandmother, Grams. 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 lead the sisters to realize that they are witches. They discover that they not only possess supernatural powers, but also come from a long line of powerful witches. The first in the line, Melinda Warren, possessed three powers: the power to move things with her mind, to freeze time, and to see into the future. Melinda 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 eldest, most over-protective sister, develops the power of telekinesis and can move things with her mind. Her telekinesis is usually triggered by anger, and is first channeled through her eyes. But she can soon channel her telekinesis through her hands, like her ancestor Brianna and her Grams. She later gains the power of astral projection, where she can make a "copy" of herself appear wherever she desires by projecting her consciousness, while her physical body is left standing there unconscious. Her power of astral projection develops from her power of telekinesis, when she feels an overwhelming need to be in two places at once, in the season two episode "Ms. Hellfire". While in that status, she is unable to use her power of telekinesis. In the season three episode, "Primrose Empath", one of the last times she is shown using her astral projection power, she is able to project her "clone", while her physical body stays conscious.

Piper, at first the middle child and mediator, and later eldest, receives the power to freeze objects therefore essentially "stop time". At first, Piper's control of her powers is weak. Her range is not very far, and she cannot keep people or objects frozen for very long. As her powers grow, she is able to expand her range. She can freeze entire rooms, or direct her freezing powers only at certain objects or people without freezing everyone and everything. By season three, she can also keep demons or people frozen while unfreezing only certain body parts, such as demon heads, which comes in handy when she questions them. Piper can also keep people frozen for very long periods of time without her having to be in the room to "hold the freeze". It is only late in season three when it is revealed that her power to freeze works at a molecular level; they work by slowing molecules down to the point where they appear frozen in time. This power later evolves so that instead of slowing molecules down to freeze them, she is able to speed molecules up, causing objects (and demons) to explode. Her freezing power is triggered by fear, panic, or surprise, while her explosion power (before she gains full control of it) is triggered by anger.

Phoebe, initially the youngest sister, then the middle sister receives the power of premonition, which allows her to see future events. Her power is triggered through touching people or objects (or, if the psychic residue of an area is strong enough, simply being in the room). While her premonitions are initially passive, she eventually gains control to the point that the power is considered an active one. Over time, her power of premonition evolves in several ways. She begins having visions of past events in season one's episode, "The Witch Is Back", making her the first of the sisters whose powers advance. Her powers of premonition later grow stronger, so that she is able to feel the emotions in her premonition; for example, she feels her mother drowning when she receives a vision of the past in season two's episode, "P3 H2O". This ability to feel the emotions within her premonitions may serve as a foretelling of her soon-to-come empathic powers. In season five's episode, "The Eyes Have It", after not having had any premonitions in months due to overwork and overstress, she seeks the help of Gypsies to unblock her powers. She gets a "super premonition", in which she astral projects into the future within her premonition; her ability to feel what happens grows so that when she is hurt in her vision, her present self is also physically harmed. Though this type of premonition occurs very rarely, she is also able to astral project into the future and converse with her future self in season eight. Phoebe also has the power to share premonitions with others who have the gift of foresight. Phoebe eventually obtains the active power to levitate, which is useful in combination with her martial arts skills. Her power of levitation is first seen in season three's premiere episode, "The Honeymoon's Over". Her empathic powers, which develop in season six, allow her to read others' emotions and affect the supernatural powers of other beings (whose powers are tied to their emotions). She can channel the powers and reflect the attacks of demons and other magical beings, such as the Valkyries seen in "Valhalley of the Dolls". In season six she has her powers removed for misuse, but is re-awarded her premonition power in the final season.

After the tragic and unexpected death of Prue, Piper and Phoebe learn that they have a younger half-sister named Paige, born to their mother Patty and Sam, her Whitelighter, a sort of guardian angel for witches and future whitelighters. As this type of relationship was forbidden and unheard of at the time, Patty and Sam gave the baby to Sister Agnes, 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". At first, Paige can only orb out momentarily and reappear in the same spot; this is triggered by fear and surprise. She quickly develops the power to orb wherever she wants. According to the prophecy of the three Charmed Ones with three distinct powers, the third sister has the power of telekinesis. Being half witch and half whitelighter affects the powers Paige inherits from Patty: instead of telekinesis like Prue's, Paige is able to move an object by calling for it; the object then orbs to her, or to any location she wishes. This power is called telekinetic orbing. Though this power requires the use of verbal commands, she can sometimes use it silently, such as when in a state of enhanced power. In Season 5, Paige reveals that she also has other Whitelighter powers, such as glamouring. Halfway through Season 8, Paige's Whitelighter side develops more fully when she becomes able to magically heal others and to 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 repeatedly creates 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 the father of her children. Others who keep the Charmed Ones' secret over the years include police inspectors 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 the many other creatures in the magical community.