Cthulhu Mythos is the term coined by the writer August Derleth to describe the shared elements, characters, settings, and themes in the works of H. P. Lovecraft and associated writers. Together, they form the mythos that authors writing in the Lovecraftian milieu have used—and continue to use—to craft their stories. Although this legendarium is sometimes called the Lovecraft Mythos—most notably by the Lovecraft scholar S. T. Joshi—it has long since moved beyond Lovecraft's original conception.
Robert M. Price, in his essay "H. P. Lovecraft and the Cthulhu Mythos", sees two stages in the development of the Cthulhu Mythos. The first stage, or "Cthulhu Mythos proper" as Price calls it, took shape during Lovecraft's lifetime and was subject to his guidance. The second stage occurred under August Derleth who attempted to categorize and expand the mythos after Lovecraft's death.
First stage (the mythos proper)
During the latter part of Lovecraft's life, there was much borrowing of story elements among the authors of the "Lovecraft Circle", a clique of writers with whom Lovecraft corresponded. This group included Clark Ashton Smith, Robert E. Howard, Robert Bloch, Frank Belknap Long, Henry Kuttner, and others.
Most of the elements of Lovecraft's mythos were not a cross-pollination of the various story-cycles of the Lovecraft Circle, but were instead deliberately created by each writer to become part of the mythos — the most notable example being the various arcane grimoires of forbidden lore. So, for example, Robert E. Howard has his character Friedrich Von Junzt reading Lovecraft's Necronomicon in "The Children of the Night" (1931), and Lovecraft in turn mentions Howard's Unaussprechlichen Kulten in both "Out of the Aeons" (1935) and "The Shadow Out of Time (1936).
The mythos as a background element
According to David E. Schultz, Lovecraft never meant to create a canonical mythos but rather intended his imaginary mythology to serve merely as a background element. Thus, Lovecraft's "pseudomythology" — a term used by Lovecraft himself and others to describe the beings appearing in his stories — is the backdrop for his tales but is not the primary focus. Indeed, the cornerstone of his stories seems to be the town of Arkham and not beings like Cthulhu.
That Lovecraft gave more weight to his "Arkham cycle" locations than to his pseudomythology is perhaps demonstrated by his so-called revision stories. Will Murray points out that while Lovecraft often employed his fictional pantheon in the stories he ghostwrote for other authors, he reserved Arkham and its environs exclusively for those tales he wrote under his own name.
Furthermore, Lovecraft may not have been serious when he spoke of developing a myth-cycle and probably would have had no need to give it a name anyway. Since he used his mythos simply as background material, he probably had this in mind when he allowed other writers to use it in their own stories. Moreover, it could be said that Lovecraft's mythos was a kind of elaborate inside joke, propagating among the writers of his circle and wearing thin upon his death. Derleth seems to have not understood this and believed that Lovecraft wanted other authors to actively write about the myth-cycle rather than to simply allude to it in their stories.
Second stage (the "Derleth Mythos")
The second stage began with August Derleth who added to the mythos and developed the elemental system, associating the pantheon with the four elements of air, earth, fire, and water. To understand the changes that Derleth made to Lovecraft's mythos, it is important to distinguish among Lovecraft's stories. Price says that Lovecraft's writings can be divided into three separate groups: the Dunsanian, Arkham, and Cthulhu cycles. The Dunsanian stories are those that are written in the vein of Lord Dunsany (and may include Lovecraft's so-called Dream Cycle tales), the Arkham stories include those that take place in Lovecraft's pseudo-legendary New England setting, and the Cthulhu cycle stories are those that utilize Lovecraft's cosmic story-cycle (the Lovecraft Mythos).
Rather than distinguish among Lovecraft's various cycles, Derleth combined them, ignoring individual distinctions, to create a large, singular story-cycle. So, for example, Derleth appropriated Nodens from the Dunsanian cycle and leagued him with the Elder Gods against the Old Ones. Derleth also introduced a good versus evil dichotomy into the mythos that was contrary to the dark, nihilistic vision of Lovecraft and his immediate circle.
Derleth further ignored any distinction between the story-cycles of Lovecraft and those of other writers. If Lovecraft referenced a name from another author, Derleth took that as justification to include the other author's story-cycle in the Cthulhu Mythos. For example, he developed Hastur into a Great Old One represented as an avatar by the King in Yellow of Robert W. Chambers from a passing reference linking Hastur and the Yellow Sign in Lovecraft's The Whisperer in Darkness.
Finally, Derleth apparently assumed that any story that mentioned a mythos element belonged to the Cthulhu Mythos — consequently, any other element in the story also became part of the mythos. Hence, since Lovecraft made passing reference to Clark Ashton Smith's Book of Eibon, Derleth added Smith's Ubbo-Sathla to the mythos. Because of Derleth's broad canon, the mythos would indeed grow enormously.
The mythos is centered on the Great Old Ones, a fearsome assortment of ancient, powerful deities that once ruled the Earth. They are presently quiescent, having fallen into a death-like sleep at some time in the distant past. The most well-known of these beings is Cthulhu, who currently lies "dead [but] dreaming" in the submerged city of R'lyeh somewhere in the Southeast Pacific Ocean. One day, "when the stars are right", R'lyeh will rise from beneath the sea, and Cthulhu will awaken and wreak havoc on the earth.
Despite his notoriety, Cthulhu is not the most powerful of the deities nor is he the theological center of the mythos. Instead, this position is held by the demon-god Azathoth, an Outer God, ruling from his cosmically centered court. Nonetheless, Nyarlathotep, who fulfills Azathoth's random urges, has intervened more frequently and more directly in human affairs than any other Outer God. He has also displayed more blatant contempt for humanity, including his own worshippers, than almost any other Lovecraftian deity.
Derleth had his own take on the mythos and tried to make it conform to his own Catholic values and dualism. Instead of a universe of meaninglessness and chaos, Derleth's mythos is a struggle of good versus evil. Derleth once wrote:
As Lovecraft conceived the deities or forces of his mythos, there were, initially, the Elder Gods... [T]hese Elder Gods were benign deities, representing the forces of good, and existed peacefully at or near Betelgeuze [sic] in the constellation Orion, very rarely stirring forth to intervene in the unceasing struggle between the powers of evil and the races of Earth. These powers of evil were variously known as the Great Old Ones or the Ancient Ones...
Lovecraft was an atheist and claimed that Kant's ethical system "is a joke." Because of this, Derleth's theories about the Cthulhu Mythos are inconsistent with Lovecraft's design. The mythos was never intended to be a cohesive, singular entity; instead, it should be regarded as simply a collection of ideas that can be used in separate works to provoke the same emotions.
Another problem with Derleth's mythos is that the Elder Gods never appear in Lovecraft's writings; except for one or two who appear as "Other Gods", such as Nodens in Lovecraft's "The Strange High House in the Mist" (though perhaps this is an example of how "very rarely [they stir] forth"; i.e., usually never). Furthermore, the Great Old Ones, or Ancient Ones, have no unified pantheon. Indeed, the term "Ancient Ones" appears in only one Lovecraft story, "Through the Gates of the Silver Key" (moreover, the story is actually a collaboration between Lovecraft and his friend and correspondent E. Hoffman Price).
Derleth also connected the deities of the mythos to the four elements of air, earth, fire, and water. This system left gaps which Derleth filled in by creating the beings Ithaqua, representing air, and Cthugha, representing fire. However, the system has a few problems. For example, Derleth classified Cthulhu as a water elemental, but if this were so, how could he be trapped beneath the ocean and how could his psychic emanations be blocked by water? Another problem arises when applying the elemental theory to beings that function on a cosmic scale (such as Yog-Sothoth)—some authors have tried to get around this by creating a separate category of aethyr elementals for Azathoth, Shub-Niggurath, Nyarlathotep, and Yog-Sothoth. Finally, Derleth matched the earth beings against the fire beings and the air beings against the water beings, which is not consistent with the traditional elemental dichotomy (namely, that air opposes earth and fire opposes water).
To his credit, Derleth became a publisher of Lovecraft's stories after his death. Lovecraft himself was very critical of his own writings and was often easily discouraged, especially when faced with any rejection of his work. Were it not for Derleth, Lovecraft's writings and the Cthulhu Mythos might have remained largely unknown.