Euphemia is born as the third princess to the Holy Britannian Empire. She is given every luxury that can be afforded to her, and because of their family's wealth there isn't anything she can't have. Despite that, Euphemia grows up kind and generous.
During her childhood years, Euphemia forms close bonds with her siblings; in particular, her full sister Cornelia, and her half siblings Lelouch and Nunnally. Later on, when Lelouch and Nunnally are shipped off to Japan, soon to become conquered by Britannia and renamed Area Eleven, Euphemia is heartbroken. She is even more so when told the two are dead.
Her life before sixteen is peaceful, more or less, as much as a princess of this empire can be.
When she turns sixteen, Euphemia decides to take a break from her formal schooling in order to get in on the political scene her siblings have dominated. Another one of her brothers, Clovis, is killed by a terrorist and so she goes to Area Eleven, the land where three of her siblings died and Britannia owns. There, she meets Suzaku Kururugi, after she makes a bedsheet rope and jumps out a window: he catches her when she falls. She and Suzaku become quick friends, due to their similar beliefs-- both wish for a peaceful world, and believe this can be attained from the inside of a system.
After she reveals herself as the princess she is, Euphemia asks that Suzaku help her prevent any unnecessary deaths.
A while later, Euphemia is coincidentally at the Lake Kawaguchi Convention Center Hotel, disguised, when the Japanese Liberation Front takes all the guests hostage. She stands and again throws around her status as a princess, intending to save the other hostages, as they have begun to kill hostages. Lelouch, leading his own terrorist group, was also headed to the hotel. The two meet and even though Lelouch is masked Euphemia has a hunch that it's him-- she once believed he was dead, but as she grew older doubt started to grow in her mind, and that is why she's able to believe. The hostages are eventually freed and no one else dies.
Probably under influence of what just happened, Cornelia asks Euphemia to decide upon a knight for protection. Euphemia is troubled by the decision and asks for time to think. She goes attends a function at a museum and is told to pick a painting she personally gives her own blessing; beforehand her advisors had told her to pick a certain painting because it was patriotic, and not to pick a painting she liked because it was painted by a half-Japanese artist. (The painting Euphemia marks is the one she was advised to.)
At the function, people are to ask her questions about the museum; though the press pursues other things instead, asking her about her choice of knight. During, a fight starts elsewhere, shown over a TV in the museum, and a prisoner is broken out of jail. Suzaku is fighting in that battle, and when he's revealed, Euphemia takes hold of the microphone and announces Suzaku Kururugi is to be her knight. This provokes a scandalized reaction from the crowd, because most Britannians are racist to a point and look down on the citizens of conquered nations.
Cornelia is worried for her and advises her again to change her mind, but Euphemia is deadset on it. Suzaku remains her knight until he leaves the frontlines in a battle against Zero, Lelouch's terrorist alter-ego, and is arrested for it. Though during another battle Euphemia convinces him to become her knight once again, eventually declaring her love for him, which had developed slowly through their interactions.
Later on, she and Zero are stranded on a deserted island together with Suzaku and Zero's ace pilot, Kallen. Euphemia and Zero meet once again and Euphemia convinces him to unmask; she knew it was Lelouch all along and is extremely relieved to see her hunch was right-- he wasn't dead after all. This allows her to come visit both Lelouch and Nunnally during a school festival, though the media catches her there.
She makes an announcement at the festival. Euphie announces the SAZ-- the Special Administrated Zone, a place where Japanese people can call themselves Japanese and not be oppressed by the Britannians.
Many people do not approve of her plan, but with the help from one of her siblings, it's set into motion. Everything seems to be going along perfectly, like a fairy tale-- Euphemia can be happy with her family and Suzaku in the Zone, and thousands of other people can be happy, too. She's so close to realizing her dream and proving that it's true, things really can be changed from the inside. No system is irreversibly corrupt.
Things continue to look up until Lelouch speaks to her as Zero in a back room during the ceremony. He retrieves a gun from his pocket; a gun made of ceramic so that metal detectors can't pick it up. He tells her that she is to shoot him so that there is a riot and her popularity drops to zero.
Euphemia opposes this when he mentions the throne: she says that she's relinquished that right already, because she predicted them taking it away from her for this anyways. And she says she doesn't care if they take it. She hasn't given up anything she truly treasures. She goes on to say that it was for Nunnally's sake that she did this. With that, Lelouch is convinced of her conviction, and the two shake hands, sealing their promise to work together for their ideal world.
The half-siblings talk for a while before Euphemia asks Lelouch why he was so convinced that she'd shoot him if he wanted her to; he goes on to talk about his geass, a power he has. This power can give a person an absolute command, something that a person can't resist.
Before he can give an example, Euphemia finds herself in Exsilium.