He is an inventor who turns an old racing car (originally named the "Paragon Panther") into a flying, floating motor-car (Chitty Chitty Bang Bang). These inventions were designed and created by the craftsman Roland Emett. He is named after a British chieftain who fought against the Romans under the emperor Claudius. The name "Caractacus Pott(s)" is also similar to "crackpot", a derogatory term for someone who is eccentric, particularly a scientist or inventor. In the book he is a Commander in the Royal Navy, which is reflective of Fleming himself (and also incidentally Fleming's James Bond character). However, the filmmakers chose not to carry over the Commander part of his life and there is no hint of it in any of the set design, dialogue, or behaviors.
He lives with his twin eight-year-old children, Jeremy & Jemima, and Grandpa Potts on the Potts farm. He develops a romantic relationship with Truly Scrumptious (the daughter of Lord Scrumptious). In the book, however, he is married and his wife's name is Mimsie. For the movie, however, it was felt that a romantic relationship would serve the story better, and so his character was written as a widower. Both the book and the movie have him selling his candy invention to Lord Scrumptious. Aside from the candy invention, the car, and some of the characters, little else was taken from the original book.