Cthulhu is a giant cosmic entity with the head of an octopus, rubbery looking body, prodigious claws on his hands and feet, and long narrow wings on his back. His name is apparently derived from the Classical Greek word "chthonic", meaning "subterranean".
He is also the high-priest and leader of Cthulhy which have come from the skies to colonize Earth in prehistory. Although currently in a deathlike state of hibernation, Cthulhu and his alien brethren can still manifest themselves in the minds of some people, and are predicted to revive once the stars are right.
Despite his unearthly origins, Cthulhu's status as a supernatural deity worshiped by both humans and Deep Ones has made him an important figure in the history of our planet. H. P. Lovecraft, in a 1933 letter addressed to James F. Morton, has drawn Cthulhu's genealogy which reveals that the creature is a direct descendant of the Outer Gods and an ancestor of Shaurash-ho, Yogash the Ghoul, K'baa the Serpent, Ghoth the Burrower, Llunwy of Wales, Owen Gwynedd and Lovecraft himself.
Little is known about Cthulhu's origins, other than he's the offspring of a being called Nug and the grandchild of the Outer Gods Yog-Sothoth and Shub-Niggurath — both of which are grandchildren of the primordial Azathoth, who created the universe.
Cthulhu is a gigantic humanoid with both cephalopod and draconian features and the ability to heal body damage. He is perhaps most notable for the deeply disruptive effects that his presence may have in the minds of humans. A mere gaze of him may easily induce insanity and even death for the unfortunate witness. Even from his sunken tomb in R'lyeh, in the Pacific Ocean, Cthulhu can manifest his presence in the subconscious minds of particularly sensitive people, especially cultists, madmen and artists. The most frequent manifestation occurs in the form of nightmares.
At some point in the Paleozoic Era, Cthulhu arrived on Earth along with his escort of alien followers who built stone cities of non-euclidean architecture and fought long-standing wars against another alien race known as the Elder Things.
The secret cult of Cthulhu is extremely ancient and spread throughout the globe, from New Zealand to Greenland, from the USA to China. Mention has been made of the "undying leaders of the cult in the mountains of China". Cultists believe that "the Great Old Ones" will liberate them from law and morals, and their rituals are noted as disturbingly animalistic, wild and even murderous. In addition to this human cult, Cthulhu is also worshiped by aquatic Deep Ones and might be related to, or even represent the same entity as their god Dagon.
The rituals of the cult of Cthulhu notably involve the chanting of the phrase "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn", which is translated as "In his house at R'lyeh dead Cthulhu waits dreaming". The phrase can also be shortened to just "Cthulhu fhtagn".
According to the cultist known as Old Castro, Cthulhu and his star spawn (which he refers to as "Great Old Ones") have come from the stars and built their cities long before the advent of mankind. He also claims that although they have a physical shape, they're not made of matter, which explains their extraordinary abilities. It is believed that when the stars are arranged in a certain way they can hop effortlessly from one world to another. Conversely, when the stars are not in that right conformation they cannot live, but are unable to truly die either so instead they remain in a state that the cultists refer to as death, but which more closely resembles a form of stasis, hibernation or cryptobiosis. Even in that state, they can still be perceived and manifest themselves in the minds of men, especially those artistically inclined — poets, sculptors, architects, etc.
The claim that the Cthulhu spawn have colonized Earth in prehistory and that they're not made of ordinary matter is latter corroborated by imagery found in the prehuman ruins of the alien Elder Things in Antarctica.