As with all the vampire clans in the World of Darkness setting, Malkavians suffer from a specific flaw: in this case, they are incurably insane. However, many Malkavians believe their insanity to be a strength rather than a weakness. Exactly why they all suffer from insanity is unknown, but according to the Book of Nod, all third-generation vampires were cursed by Caine after the second-generation vampires were destroyed. One of these third-generation vampires was Malkav, from whom Malkavians come.
According to Malkavian legend, when Malkav was killed, all his childer came to his corpse and drank the blood of their father, thus collectively diablerizing Malkav. He is said to speak inside each and every Malkavian's soul and connects them into one collective consciousness. This "hive mind" is sometimes called "the Cobweb" or "the Malkavian Madness Network", which contains each thought and memory that any Malkavian in the world has ever had (and sometimes is about to have).
The Malkavians possess a rare ability (Discipline) called Dementation, which can alter the way a victim senses reality. It can be used to increase the Malkavian's own oracular ability or to induce insanity in others. In earlier editions of the game, this power was the initial province of the Malkavian antitribu, but now can be found in the vast majority of the clan's membership. Some Sabbat Tzimisce elders endeavor to learn Dementation, however, to gain insight in the great ways of the Jyhad if they succeed. Most Malkavians are willing to attempt to educate others of their rare power, but unfortunately, learning Dementation will often turn a non-Malkavian insane themselves; as a result, study of the Discipline is rare among other Clans and the Malkavians themselves are often viewed with a mixture of suspicion and contempt.
With the formation of the Camarilla, the Malkavian elders came to the conclusion for the clan to survive they would have to remove Dementation, instead taking up the commonly-known mental Discipline Dominate. According to the Malkavian Clanbook, Dementation was blocked by six of the oldest Malkavians who called for a gathering of the entire clan through the Malkavian Madness Network. This became known as The Great Prank, and strangely, no one else noticed that the Malkavians were gone. When almost all the Malkavians had been collected, they were changed.
Roughly one-tenth of Malkavians did not attend for whatever reason, and as a result the clan was split into two parts - the changed and the unchanged. Those who had their grasp of Dementation blocked remained part of the main clan, while those who refused to do so became known as the antitribu - most of whom later joined the Sabbat. The Malkavian antitribu continue to practice Dementation, growing steadily more insane due to the brutal conditions of Sabbat unlife (represented in game-terms by Sabbat Malkavians having two permanent derangements rather than the Camarilla's single derangement) while the more "stable" Malkavians remained part of the Camarilla. This division lasted for centuries until the Final Nights, when the "ban" was released in 1997 and Dementation surged back into the minds of Malkavians everywhere, an event which became known as The Awakening. This roughly coincides with the death of Anatole (White Wolf's canon Malkavian character), but there is no definite link between these two events, although it may have been related to the Week of Nightmares in July 1999.
Noted in the Clan book Ventrue: Lords of the Damned, There are Kindred that are called Malkavians. This variation is closer to the original but rather than being a Bloodline like the Malkovians, the Malkavians suffer a vitae related mental disorder called Malkavia. Malkavia is neither a disease nor a supernatural malady, but rather a bit of both, a blood curse that is transmittable but incurable. Although it is believed to have first affected the Ventrue, any vampire, no matter the clan or bloodline can become a Malkavian. Malkavians all possess a unique discipline known as Dementation.