Zahariel was a bad-ass Librarian of the First Legion during the Great Crusade and later joined Luther in exile on Caliban due to inexplicable orders of their Primarch Lion El'Jonson, despite being one of the most idealistic Space Marines you'll ever find.
Before the Imperium turned up, as a child of about seven years old he and his cousin Nemiel joined the The Order (a knightly order where Lion El'Jonson was grand master) after spending a night stood to attention without moving, outside of their fortress walls... without shoes or a coat... ON A DEATH WORLD.
After a few year and a cliche training montage, he loses his mentor and hero to a Beast of the Forest, so naturally he goes on an EPIC QUEST FOR VENGEANCE!
On the road discovers Watchers in the Dark who of course tell him "BEWARE", "THE FORESTS ARE HAUNTED", "TURN BACK", "YOU HAVE A SECRET HIDDEN POWER" and all that cliched shit, he continues on his merry way and eventually slays the beast.
Oh... the beast happens to be a Calibanite Lion; the biggest, nastiest beast on the planet, and only the Lion has ever killed a Lion before. Zahariel could only accomplish this by using his INNER POWER where he managed to slow down time enough that he wouldn't get chomped to bits and was able to phase through the thing to hit its weak point for massive damage.
Suffice to say this makes him a bit special, so he returns home the cliche hero and gets a sword made out of one of the Lion's teeth, and the Lion makes a few pointed remarks about him being the only other one to have a lion sword just like it.
Then they do a bit more war and eventually take over the planet Just as Planned. Also wiping out the conservative Knights of Lupus on the way, who wanted to keep the beasts around to keep their knightly way of life relevant (but apparently tried to work with Chaos after all).
Then the Emperor turns up, shit breaks loose and he becomes embroiled in a taliban plot to bomb the parade. Zahariel is innocent though and uncovers the plot before it happens, gaining himself a personal audience with the Emperor, which he subsequently forgets due to mind wipe bullshit.
Then he and his cousin get drafted into the Dark Angels of course, Zahariel being one of the very first new Calibanite space marines... perhaps the first actually guaranteed to be admitted entry due to his psychic powers.
... Then he got sent home with Luther and a bunch of other brothers, becoming more important, eventually sort of becoming Luther's second in command, along with the Lord Cypher (which was originally a post within the Order).
Shortly afterwards however, Nemiel gets his head punched off by his Primarch for having a minor disagreement over whether the legion can use Librarians or not (during a FUCKING DAEMON INVASION I MIGHT ADD). Not that it stopped Zahariel using his powers back home anyway.
So then, after much social and warp upheaval back home, Zahariel meets the Watchers in the Dark again who tell him how fucked up Caliban went, since humans killed all the beasts in the forest that were guarding (and soaking up the energies of) the tainted locations cause the planet had been hiding a dark secret since the beginning of time apparently (it is really close to the Eye of Terror), and now that shit (the Ouroboros) was waking up.
Luther (who in the mean time had been reading books from the Knights of Lupus with encouragement from the then-current Lord Cypher, believed to be one of the Knights of Lupus) discovers some Terrans doing a ritual apparently to summon a daemon. He and Zahariel go to break that shit up. Zahariel dies trying to kill it but learns its True Name in the process.
Zahariel had been recovering for several months, and when he awoke from his post-death coma Luther revealed that he now knew the Horus Heresy was in full swing (the Knights-Errant must have come to Caliban at this time and let that knowledge out) and Luther's plan to free Caliban from the Imperium was about to be enacted. Therefore an uncertain Zahariel lies to Luther and says he doesn't know the creature's name after realising that the Terrans were, in fact, trying to banish the creature instead of summon it.
Later, after following Cypher around for a bit to see where he's been sneaking off to, Zahariel realises that he didn't manage to kill the Ouroboros earlier, and it comes back with a bit of a vengeance. Cypher has a spastic attack and runs away.
Angels of Caliban follows immediately after this point, where Zahariel has been buried under a cave of rubble and is treated to visions from the Ouroboros and comes to the conclusion that the Ouroboros is in fact the soul of Caliban, and takes a level up in power as he starts drawing from it.
His typically idealistic position starts changing at this point, where his position within Luther's circle of trust becomes the member who wants to see Caliban restored to its "pure" state, opposed to Astelan who sees only the glory days of the "First Legion" (distinct from the "Dark Angels" who came later) and separate from Luther's design for a resurgent "Order" (also distinct from the Dark Angels or the "First") or the Lord Cypher who -along with the Watchers- only wants to keep a lid on the Ouroboros.
When a fleet of transports arrives to finally collect the exiled Calibanites, he becomes a key part of the plot to root out sympathisers within the newly arrived Dark Angels and mentally influence them whilst Luther gives a stirring oratory. However, when it looks like things are going too well, Zahariel takes issue with the lack of conflict, believing it will cause a stagnation of Luther's plan. So Zahariel kills that Dark Angel's commander Belath (Astelan's nemesis) and the party devolves into bloodshed.
He then chases down the Lord Cypher, who took the ensuing carnaged caused by the fighting to level a few plasma shots at Zahariel. They have a stand off where the Watchers in the Dark protect Cypher from Z's attacks, but back off when they realise he is being fueled by the Ouroboros and threatens to let it loose from the cage. Without the protection of the Watchers, Zahariel then kills the Lord Cypher. (we don't see the death in gory details, only Cypher's fall and the body being hidden by the Librarians)
When no-one can find the body, Zahariel is then invested as the new Lord Cypher by Luther.
At some point later the Angels fall and Caliban explodes.
As the plot progresses, Zahariel is overwhelmed by the Ouroboros and becomes its vessel for its power, which he believes is the "Heart of Caliban", though it is strongly intimated that he does not really understand what he is dealing with. Zahariel kills the Lord Cypher of Luther's era and takes his place. This makes him a strong contender for the secret identity of Cypher in the 41st Millennium, especially considering that both figures have a strong connection to the Ouroboros device and are pretty much the only individuals outside of the Watchers in the Dark who are aware of its capabilities.
However, Astelan of the Fallen Angels points out that "his" Cypher was slain by Corswain during the battle over Caliban. If Astelan is telling the truth (his track record on "truth" is dubious) then that means Zahariel cannot be Cypher in the 41st Millennium.
The novel Pandorax threw an interesting spanner into the mix by introducing a NOT-Fallen Fallen. Grand Master Epimetheus was one of the Grey Knight founders along with Janus, Khyron, etc and was trapped in stasis on Pandorax for ten thousand years. Grey Knights change their names to be anti-daemon, and 40k Epimetheus is very clearly a Psyker just as Zahariel was, unlike 40k Cypher. It is made quite clear in a conversation between Epimetheus and a Lord of Change that Epimetheus should not have existed in that timeline and that he somehow traded destinies with someone else (assumed to be the ORIGINAL Cypher). Though not actually fallen (having gotten out just in time), Epimetheus still considers himself "Fallen" since he really should have been, and so he avoids the 40k Dark Angels out of shame.
As an extension of this, the Lord of Change claims to be the one who corrupted half of the Dark Angels legion to become the Fallen Angels, but remarks that Epimetheus was the one who "nearly spoiled everything." Epimetheus points out that he recognised this daemon even before it makes the claim of corrupting the legion proceeds to banish the fucker back to oblivion using its True Name. If simple Lord of Change over a few pages of a much bigger storyline really was the entity that corrupted Luther's portion of the Legion, then it means that Zahariel and the Ouroboros are a third party in the Fallen/Loyalist war that inevitably destroyed the planet.
Therefore there are several things to consider regarding what happens to Zahariel:
- As the only currently identified Lord-Cypher in the fluff, Zahariel is unlikely to be the 40k Cypher, because it spoils the mystery of his identity. Gav Thorpe has pointed out that GW consider Cypher's origins to be as shrouded as the Two Missing Primarchs, because the revelation rarely matches the expectation. So Zahariel is either dead, or he bestowed the position on someone else prior to the fall of Caliban and moved on.
- Epimetheus is an extremely potent psyker (one of the most powerful the Grey Knights have ever had) and as the one who "nearly spoiled everything" is therefore aware of the circumstances of the Fall of Caliban. He must also have been recruited prior to the Siege of Terra; so Epimetheus cannot be a member of the Lion's loyalist fleet that arrived later and has to be some sort of pivotal position on Caliban prior to its fall. Very few other candidates fit these criteria except perhaps Chief Librarian Israfael who was defeated by Zahariel and locked within the dungeons of the Rock.
- According to the Lord of Change, Epimetheus was not supposed to exist in that time or place and was thrown off by the unexpected revelation. Only the Watchers in the Dark and the Ouroboros itself have ever been shown or implied to have the capability of altering timelines and put fear into daemons by their mere proximity. This would mean that mean that Epimetheus' presence on Pandorax is a paradox, but because of Zahariel's interaction with both the Ouroboros and the Watchers he is still the stronger candidate.
No matter who ends up becoming Epimetheus, the Grey Knight's "end" is to be captured by Abaddon during the Pandorax campaign and eventually be handed over to Fulgrim to gain his allegiance for the upcoming 13th Black Crusade - wherein Epimetheus was to be used an an "unblemished receptacle" to become the Avatar of Slaanesh. This also makes Epimetheus a contender for the role of the Knight in Silver trapped in Slaanesh's realm that is sometimes associated with Kaldor Draigo. In fact Epimetheus was MORE POWERFUL than Draigo and even knew what was in his future, though wouldn't tell him.
A vision received by Ezekiel told a possible future in which he, Azrael, Asmodai, and some other Dark Angels went into the Eye of Terror and joined force with Kaldor Draigo to rescue Epimetheus. This new plotline has started to be developed, with Asmodai even making deals with the Relictors Chapter to capture a member of the Black Legion, all so he could ask him where Epimethius was, meaning the identity of the Grey Knight is potentially going to be revealed soon.