Karzahni was created alongside Artakha by the Great Beings around 100,000 years ago. Soon after their creation, the two beings fought for the fabled Mask of Creation, a battle that Karzahni lost.
While his brother chose to make a haven for good Matoran workers, Karzahni chose to take in the bad ones, intending to repair their faults and return them to their homelands. However, his ability to fix the Matoran was not up to par, and he completely rebuilt the Matoran, but into weaker forms. To compensate for his inability to properly repair the Matoran, he gave each of them weapons. He then sent them to the Southern Continent to make sure his failures would not be discovered.
The Turaga eventually noticed that Matoran sent to Karzahni never returned from their exile, and stopped sending their poor workers. Angered by the lack of Matoran coming to him, Karzahni went into denial, blaming the Matoran for his failures. He refused to send any more Matoran away and trapped them within his realm, replacing their masks with his own twisted designs, stripping them of their identities.
When Jaller, Hahli, Matoro, Kongu, Hewkii, and Nuparu arrived in the realm of Karzahni, they were directly escorted by Manas to Karzahni himself. He ordered them to remove their masks and put on his, but Jaller was unwilling to relinquish his, having recently learned of its origins. Karzahni called upon his Kanohi Olisi to show Jaller a vision in which he did not sacrifice himself to save Takua and Teridax took control of Mata Nui. Horrified at what could have happened, Jaller resigned to the change, as did the rest of his group (with Kongu making a deft switch between Karzahni's mask and the Suletu he found).