The relationship between Xena and Callisto goes far beyond a simple hero-villain antagonism - Callisto is Xena's arch-enemy and nemesis, born out of her own dark past. Before Xena reformed (i.e. when she was still a villain herself), she was responsible for the death of Callisto's family when she had her army torch Callisto's village.

Callisto, a child at the time, was left traumatized by the attack and eventually went insane, obsessed with getting revenge on Xena. She displays signs of bipolar disorder and psychopathy, manifested in a weird brand of sadistic, gleeful, shrieking cruelty towards Xena and her associates.

Callisto intends to make Xena suffer as much as possible rather than killing her, and repeatedly lets chances to end Xena's life pass by. This is reflected in Xena's own feelings of guilt that cause her, on several occasions, to spare her enemy's life as well.

But Callisto feels constant emotional pain, which she thinks is caused by the loss of her family; she thinks that if she takes revenge, she will be free of the pain. But it probably comes mostly from having spent her life nurturing her hatred for Xena, because whenever she takes revenge she feels worse. By surrounding herself with her own evil, and feeding her hatred with guilt, she only increases the pain; and by seeking revenge, she traps herself in a downward spiral which prevents her healing. Exhibiting a classic martyr complex, she justifies herself by blaming her evil on Xena, and refuses to take responsibility for her own actions. Occasionally she tries to discuss the issues, perhaps hoping for another way out; but finds only Xena's watchful scepticism of her motives.

Callisto's first two episodes set up the themes of hatred, revenge and guilt, and pose the ethical dilemma of how Xena can ever put right the damage of her evil past. If she lets Callisto live, she will wreak havoc, kill and maim people. But if she kills Callisto, is she merely finishing the job which she started when she wrecked that little girl's life? In her first episode (Callisto), we see that Callisto has recruited a small army and spends her days training hard with them until she is 'as good as Xena' (in her words). She begins her campaign of revenge by raiding and burning villages and savagely slaughtering people in Xena's name. She hopes to revive Xena's reputation as a villain; and plans to kill Xena after destroying her reputation. Xena has no choice but to engage with her, and in a close fight Xena beats her, but can't kill her. She hands her over to the authorities, who throw her in jail. In The Return of Callisto she escapes, crippling and killing the guards. She finds Xena, but is still unable to defeat her, and instead makes her suffer by plunging her sword though the heart of Gabrielle's recently-wedded husband, Perdicas. Xena catches her again, and is wracked with guilt as Callisto taunts her about her past. A fight ensues, and Xena and Callisto fall into quicksand. Xena's inventive wit allows her to struggle free, and she watches doubtfully as Callisto is sucked under. But the ethical dilemma still hangs in the balance: Xena has killed the monster that she created, but still carries the guilt that it was all her fault.

However, that is not the end. In the Xenaverse there is a whole world beyond death; and Callisto develops a nasty habit of coming back to life. After going mad and drowning in quicksand, she also escapes from Tartarus twice, gets trapped in a labyrinth, becomes immortal, then becomes a goddess, gets frazzled in a river of lava, is crushed by a massive rockfall - twice, is stabbed to death, and is damned eternally as a demon of Hell (before escaping, being thrown back in, and finally being rescued and turned into an angel). A life of insane nightmares, it seems, has its rewards in the end.

In Intimate Stranger, Callisto works with Ares god of war to invade Xena's dreams and switch bodies with Xena, so that she is free and Xena is trapped in Tartarus. But Xena persuades Hades to let her return to earth (in Callisto's body), where she defeats Callisto and sends her back to Tartarus. However, Xena remains trapped in Callisto's body for one episode before Ares restores them to their normal selves.

Callisto again escapes from Tartarus on the companion show Hercules: The Legendary Journeys in the episode Surprise, by making a deal with Hera, Queen of the Gods. Hera allows her back to Earth for one day to kill Hercules, and promises her immortality if she succeeds. But Callisto plans on getting immortality regardless. She poisons Hercules' family, then tricks him into accompanying her to the Tree of Life (where one bite of a golden apple cures all ills, and a whole apple makes a person immortal). Hercules relucantly agrees, but Callisto traps him, uses him to reveal the tree and eats a golden apple, becoming immortal and regaining her sanity. Hercules escapes and fights Callisto, breaking her sanity once again, and then traps her in the Labryinth; and once again she is trapped, frustrated and seething with anger.

But although she is trapped in a labyrinth, being immortal means being in demand. In A Necessary Evil, when the Amazon Velasca eats Ambrosia and becomes a goddess hellbent on killing Gabrielle, Xena makes a risky deal with Callisto. She offers Callisto a chance at the Ambrosia in exchange for her help. Xena tricks her into fighting Velasca for the Ambrosia on a rope bridge over a river of lava, where she gets it and eats it; and in her moment of glorious godhood, Xena cuts the ropes and they plunge into the lava.

In Maternal Instincts Callisto (now a god) is freed from the lava by Gabrielle's evil daughter Hope, who calls her "the monster lady". In a ploy of mythical proportions, she causes Hope to kill Xena's son Solan, and laughs manically as Xena and Gabrielle's friendship is torn apart. She then appears to Xena and Gabrielle as a manifestation of their own guilt in the musical episode The Bitter Suite, where they make up again.

But by this time, Callisto has had enough of the pain inside her. In the Sacrifice story arc, Hope spins a cocoon around herself for her transformation from child into adult; and Callisto agrees to protect her until she hatches, in exchange for permanent oblivion. When Gabrielle sacrifices herself to destroy Hope, Callisto changes her mind and gleefully exclaims that she has a reason for living again. However, it proves to be a moot point as seconds later, Xena in her furious torment mutters "no more living for you" and slays Callisto with the Hind's Blood Dagger (one of only a few things capable of killing a god).

Stripped of her powers as a goddess, Callisto is condemned to eternal torment as a demon of Hell. But in The Ides of March, she is given the opportunity to return to the living if she can corrupt Xena and install Julius Caesar as emperor of Rome. She was required to do this without hurting Xena physically, but as a result of her blind rage for Xena she fails at both. She defeats Xena for the first and only time, by breaking her spine with Xena's own chakram. Callisto is returned to Hell, but her actions set into motion the events leading to Caesar's, Xena's and Gabrielle's deaths. Xena lies critically injured in the snow and Gabrielle tries to defend her, but they are captured by the roman guards. On the Ides of March, as Caesar declares himself emperor and is murdered by his peers, Xena and Gabrielle are also crucified at Caesar's command.

The fans were left with that end-of-season cliffhanger until Season 5. But as always in the Xenaverse, there is life beyond death. In the first episode, Fallen Angel, the angel Xena encounters the demon Callisto. As an act of redemption for her own guilt at Callisto's suffering, she redeems her by purging Callisto's guilt and bringing her back to the light. Callisto is lifted up and becomes an angel, utterly devoid of the pain and torment that she had always known; and in exchange, Xena is turned into a demon, sacrificing her own eternal happiness to save her.

The Sacrifice of lives and souls is a recurring theme of the show; and was not an uncommon act in those times. Xena frequently tries to sacrifice herself for redemption, and this is partly what gives her such fearlessness in the face of death. But this sacrifice for Callisto has its own unexpected rewards, as Xena is later resurrected as an angel by the power of Eli's God of Love, acting through the angel Callisto. Callisto now exudes such light and goodness that even Gabrielle can't believe it.

Soon after, Xena and Gabrielle are resurrected back on earth, and Xena becomes pregnant with Eve. But Xena doesn't know how it could have happened - and it is revealed in Seeds of Faith that the angel Callisto has caused it: Callisto herself will be reincarnated as Xena's child. Callisto's gift of Eve to Xena is also something of a way of making amends for Solan's death. So in a peculiar way, Callisto gives Xena back the child she lost, and herself gets back the family that she lost.