Daemon Targaryen was the son of Prince Baelon Targaryen and his sister-wife, Princess Alyssa Targaryen. He was the younger brother of King Viserys I Targaryen and the older brother of Prince Aegon Targaryen. His dragon was Caraxes. He was an amoral, reckless character. The Great Council of 101 AC declared Viserys his grandfathers' heir over his female cousin Rhaenys (via Viserys' father's older brother) and her seven-year old son Laenor Velaryon. When King Jaehaerys died in 103, Viserys became King. It was thought this decision by the Great Council meant right to the Iron Throne could not pass to a woman, or through a woman. Daemon thus considered himself his brother's heir, as his brother's only child at the time was a daughter, Rhaenyra. This worried many of the King's councillors, who did not wish Daemon to succeed. Daemon served as Master of Coin, then Master of Laws for his brother, but grew bored with the role, and was disliked by this brother's Hand Ser Otto Hightower. Daemon was later made Commander of the City Watch and gave the Watch their signature uniform that led to them being known as the Gold Cloaks. After Viserys' wife Aemma Arryn died in 105 birthing a son, that son died a day later. When Daemon was heard japing in a brothel about the heir for a day, Viserys declared his daughter heir.
Daemon was married to Rhea Royce, heir to Runestone, but showed no affection for her, referring to her as his "bronze bitch", and spending much time away from her. When she died childless in a hawking accident, Daemon returned to the Vale to try claiming her lands and castles. However Runestone passed to her nephew, and the Royces' liege, Lady Jeyne Arryn, made it clear that Daemon was not welcome in the Vale.
Viserys married again to Alicent Hightower, daughter of Otto Hightower. Despite having sons by her, Viserys continued to declare Rhaenyra his heir.
Daemon, with the aid of Corlys Velaryon, began a war in the Stepstones, which had been seized control of by the forces of the Triarchy. Corlys finally crowned his Daemon King of the Stepstones and the Narrow Sea. However Daemon eventually grew bored with his new Kingdom and returned to Westeros
Later Daemon married Laena Velaryon, daughter of Corlys Velaryon, Lord of the Tides, Master of Driftmark, and the wealthiest man in Westeros. She bore Daemon twin daughters, Rhaena and Baela Targaryen. However when she gave birth to her son the child was malformed and died shortly after, Laena dying three days later.
After the death of Rhaenyra's first husband Laenor Velaryon, Corlys' son, she married her uncle Daemon. Laenor was murdered by Ser Qarl Correy (possibly his lover), who was never found. It is suspected Daemon paid Qarl to perform the murder, then murdered Qarl, leaving Rhaenyra available to marry.
After Viserys died in his sleep in 129, his eldest son Aegon II claimed the Iron Throne. His half-sister disputed this, leading to the war known as the Dance of the Dragons. Daemon placed the crown on Rhaenyra's head and styled himself Protector of the Realm. Viserys and Alicent's second son, Aemond Targaryen, murdered Rhaenyra's second son from her first marriage, Lucerys Velaryon, when he came to Storm's End as an envoy. For this Daemon sent the assassins Blood and Cheese who murdered Aegon's eldest son Jaehaerys, a six-year old.
Daemon helped Rhaenyra take King's Landing. He went to Maidenpool to protect it, as Aemond was riding his dragon Vhagar round the Riverlands, burning it. Daemon's lover, the Dragonrider Nettles, fled when Rhaenyra sent orders to Lord Mooton of Maidenpool to kill her. Daemon then flew his dragon to Harrenhal and awaited his nephew Aemond. On their dragons they dueled over the God's Eye. As Caraxes fought Vhagar, Daemon leapt from his dragon and drove his sword, Dark Sister, through Aemond's blind eye, before the dragons hit the water. His body was never found, though the singers like to say he lived with Nettles. The Maesters disagree.
The current line of Targaryens are descended from him, as both his sons became Kings, Aegon III and Viserys II.