Euphemia li Britannia is the Third Princess of the Royal Britannian Empire, the daughter of Charles zi Britannia, the emperor, and an unnamed empress. She grows up out of the spotlight, for the most part. In her childhood, she was especially close to her older sister, Cornelia, and her half-siblings, Lelouch vi Britannia and Nunnally vi Britannia. The four of them spent a lot of time together, until the incident which splits the four apart: the murder of Lelouch and Nunnally's mother, Marianne. Nunnally is severely wounded in the attack, both physically and psychologically. Lelouch is crushed by his father's failure to protect them. He goes to see Charles and ask why, and eventually gives up his right of succession to the throne. As a punishment, Lelouch and Nunnally are banished to Japan as political prisoners. Japan is eventually taken over by the Britannian Empire and renamed Area 11; Euphemia, Cornelia, and the other royal siblings are told that the two are dead during this point in time.
Euphemia goes on to attend school, but doesn't have a chance to finish before she's pushed into the spotlight. Her elder half-brother, Clovis, had been ruling as the Viceroy of Area 11, until his sudden assassination. Cornelia and Euphemia are sent to this area - the former to rule as Vicereine, and the latter to rule as the Sub-Vicereine. However, all isn't well in Area 11. Clovis' death is initially blamed on the son of the former Japanese prime minister, Kururugi Suzaku - who has become an honorary Britannian after the takeover. He's put on trial for murder, but these plans are derailed when a mysterious figure calling himself Zero, who is actually her half-brother Lelouch in disguise, openly admits that he's the one that killed Clovis.(Lelouch has taken on the Zero identity in an attempt to get revenge on Charles for his many failings and rule Britannia himself.) This incident throws the leadership of the Area into further chaos.
This is when Euphy - quite literally - falls into the series. She jumps out of the window of the residence she's staying in, having grown tired of the constant political talk around her. She wants to see Area 11 for herself, and finds a willing tour guide in Suzaku, who catches her as she's falling. She doesn't reveal her identity immediately, choosing to act as simply a Britannian tourist visiting from the mainland. She eventually asks Suzaku to take her to Shinjuku, an area that was destroyed by Britannia during an attempt to retrieve a stolen 'weapon'. He's reluctant to do so at first, but she insists upon seeing it. As the two are walking through the area, the sound of loud combat echoes from some distance away. Suzaku goes in to attempt to break up the fight, leaving Euphy. She follows him, and after learning that the incident is one of infighting within the Britannian army, she steps in herself. Euphy's chosen a particularly bad time to come in, however, as one of the arguing nobles has just released a chaos grenade. Suzaku blocks the attack with his own Knightmare, and it's after this that she commands everyone to stand down, revealing her identity. This incident ends with Euphy telling Suzaku that they've both lost people that are important to them - her siblings, and his father - and that she wants to create a world where no one has to feel the pain that they have. He agrees with her philosophy, and decides to support her.
Not long after this, the princess goes to attend a conference being held at Lake Kawaguchi. However, the conference attendees and a group of tourists are taken hostage by the terrorist group known as the Japanese Liberation Front. They've chosen this particular time to attack in order to get some political prisoners released because the conference has to do with Sakuradite, an extremely important mineral resource which is largely mined in Area 11. Euphemia is merely observing the conference; because her name isn't on any official member lists, she is grouped in with the other hostages. This is a tense situation for everyone involved: Cornelia, because she wants to save her sister, Suzaku, who wants to save his friends who are in the hotel, and Lelouch, who is initially torn as to whether or not to get involved, despite the fact that his friends are also being held hostage. Although the army attempts to solve the crisis via the use of force, all of these attempts fail due to an unexpectedly strong display of weaponry by the JLF. This forces Cornelia to weigh her choices; while she wants to show the terrorists no mercy, she also has desire to protect her sister.
At this point, Cornelia receives a message from Zero, requesting a meeting with her. She allows this meeting, and he immediately states that he'll save Euphemia. She allows him to go ahead. Unbeknownst to her, Lelouch has sent a message to the leaders of the JLF asking to meet with them, and they allow him to enter the hotel. Immediately afterwards, Cornelia changes her tune, stating that this is their chance to take out the terrorists and Zero all in one shot. They send Suzaku in to take out the terrorists' weaponry below the hotel, which will allow the others to rescue the hostages. Suzaku is only serving as a decoy in this situation, though he is unaware of that fact; if a Number (a resident of an Area occupied by Britannia), dies during an operation such as this, it's seen as a minor sacrifice compared to a Britannian. The real plan is for the army to attack while the underground JLF members are occupied.
While this is happening on the outside, on the inside, one of the tourists - a girl named Nina - goes into a blind panic. The terrorists, angered by her outburst, take her with the intention of killing her. This is when Euphemia reveals her identity and demands to be taken to the leader of the terrorists. They do so, if for no other reason than having a Britannian princess as a bargaining chip will help strengthen their position in negotiations. She and Zero eventually meet, and he remarks on how she hasn't changed at all. He points a gun at her, saying that no matter her intentions, she's still Charles' daughter, but he doesn't fire. In the end, all of the hostages are rescued and returned safely.
Euphemia's duties as Sub-Vicereine of Area 11 keep her out of the series' main focus for some time, though she is present when Cornelia leads a squadron against the JLF at Narita. This is over her sister's protests that she shouldn't see any of what battle is like. Cornelia eventually relents, putting her in charge of the medical teams that will be present during the operation. Things don't go as planned for the Britannians, however. Zero and his Black Knights join the counterattack and eventually wipe out much of the Britannian army in an attempt to go directly for Cornelia. Because Suzaku's unit, the Advanced Special Envoy Engineering Corps, hasn't been deployed due to their status as a special branch, Euphemia places the order for their deployment after Cornelia is largely cut off from the others. The goal is to create an opening for Cornelia to escape. The plan is a success, and while Cornelia is frustrated at being bested by Zero yet again, Euphemia is pleased with the outcome.
The next time we see Euphemia, it is during the opening of an art gallery in her deceased brother Clovis' honor. Behind the scenes, though, there is a lot of pressure on the princess on a number of fronts. Cornelia has advised her younger sister to assemble a group of knights to protect her. Her advisors are pressuring her to follow the policy of putting Britannians first and Numbers second. There's also the matter of Zero to deal with; while Cornelia is taking the lead role on this, it hasn't escaped Euphy's notice. In the midst of all of this, a fight has broken out between the Black Knights and the Britannian army. The latter has planned the execution of General Toudou, a formerly high-ranking Japanese general who was involved in the Japanese Liberation Front. The Black Knights go in to rescue him, and Suzaku's unit is deployed. The princess takes note of Suzaku's bravery, loyalty, and adherence to his ideals, and announces that she has chosen him to be her knight, to the shock and surprise of everyone around her. She's warned that she may face a number of challenges thanks to the discrimination policies against honorary Britannians and may even need to defend her own right to succession of the throne, but she goes ahead with the decision regardless.
During the time that Suzaku serves as Euphy's knight, the two become particularly close. After he voluntarily steps down from the position after abandoning the front lines during a fight against Zero, she confesses that she's in love with him and wants him to remain as her knight. He decides to take up his position once again after her confession. Not long after this, a major military operation takes place at Shikinejima. The combination of a pair of surprise attacks during this operation - one attack on Suzaku from the Black Knights, and a second attack on the Black Knights by the Second Prince, Schneizel el Britannia - results in Euphemia meeting with Lelouch on a nearby island. She gets him to unmask himself, and the two have a long conversation during which they both admit they've missed their childhood closeness. This conversation sparks a chain of events that will eventually lead to her death.
She first arranges to go to Ashford Academy, where Lelouch, Nunnally, and Suzaku attend school, for a visit. This visit doesn't go entirely as planned, however. The media is tipped off to Euphy's visit, which takes place during the school festival. She takes the opportunity to make an announcement that surprises everyone. She intends to found a Specially Administrated Zone within Area 11, which will be called 'Japan'. This throws a number of people around her into chaos: Lelouch, thinking that all the hard work he's done will come to nothing, Cornelia, who is opposed to the idea, and Suzaku, who is torn between his loyalty to Britannia and his heritage. In the end, though, the idea turns out to get massive public support. Thousands of Japanese people apply to emigrate to the SAZ. Despite her reservations, Cornelia even goes so far as to arrange for a prominent government official to advise her on the project. Just before the dedication ceremony, Schneizel and Cornelia have a conversation about this in which he praises Euphemia's decision, stating that the SAZ will bring Area 11 back into order, stopping the terrorist attacks. He questions what the older princess is thinking, and she states her decision is simply her duty as vicereine of the Area. The situation is tense as the group arrives at the opening ceremony and only becomes more so as Lelouch, in his Zero persona, shows up at the ceremony and demands to have a word in private with Euphy. She consents, despite her advisors' protests, and the two go to a private room to talk.
Lelouch demands to know what Euphemia's ideas are in all of this. She admits to him that she is doing this for Nunnally's sake. She has even given up her right to succeed the throne in order to make the SAZ happen; no action on that level comes without a price, and giving up her right of succession was that price. This convinces him of her sincerity, and he begins to speak freely. He gives her information about his Geass, an ability which manifests for him as the power to command anyone to do his bidding with no resistance. He gives the example of commanding her to kill all of the Japanese people, saying that he could make her do that if he wanted to. Unbeknownst to him, however, Lelouch has lost the ability to control his Geass. The order goes through, and while Euphemia initially resists, it eventually breaks through her resolve. She orders the military to begin slaughtering the people that have gathered there. They do so gleefully, and she even picks up a stray gun and begins killing innocents herself. With regret - and the confession that she may have been his first love - Lelouch puts an end to the massacre by shooting Euphemia.
Suzaku recovers her body and takes her to a medical area. Once she's settled in, he asks her why she gave the order to kill everyone. She doesn't understand what he means, because when a person is under the influence of the Geass, they don't remember what they've done after that, due to the brain damage it causes. The Geass tries to take hold, as he is of Japanese descent, but she's unable to carry it out - either because she loves him too much, or is simply unable to after being fatally wounded. They spend their last moments together, and Euphemia's last questions are whether the SAZ was a success and if the people are happy. Suzaku lies, saying that everything had gone according to plan and that everyone was happy. She dies immediately afterwards. It's at this point that she'll wake up in Landel's Institute. (The official story from the Britannian Empire is that she is later declared responsible for the massacre, stripped of her royal status, and executed.)