As a follower of Artemis, Callisto — whom Hesiod called the daughter of Lycaon, king of Arcadia — took a vow to remain a virgin, as did all the nymphs of Artemis. According to Hesiod she was seduced by Zeus and continued undetected by the goddess until, already with child, she was seen bathing and so discovered; the enraged goddess then changed her into a beast. She gave birth to Arcas, was hunted, and was finally placed among the stars by Zeus to save her from being killed by her own son and the Arcadians. Eratosthenes mentions a variant in which the companion of Artemis seduced by Zeus and turned into Ursa Minor was named Phoenice.

According to Ovid, it was Jupiter who took the form of Diana to evade his wife Juno's notice, forcing himself upon Callisto while she was apart from the other nymphs. Her pregnancy was discovered months later as she bathed with Diana, who in anger expelled her from the group. After Callisto gave birth to Arcas, Juno avenged her wounded pride by transforming the nymph into a bear. Sixteen years later Arcas, hunting, was about to kill his bear-mother with his javelin when Jupiter averted the tragedy by setting mother and son among the stars as Ursa Major and Ursa Minor; Juno, frustrated, appealed to Tethys that the two might never touch her waters, a poetic explanation for the constellations' circumpolar positions.

According to Hyginus, the motif of Zeus transforming into Artemis came from a lost comedy by the Attic poet Amphis, in which Zeus embraced Callisto in Artemis's likeness, and Callisto, when questioned about her pregnancy, blamed the goddess, who then changed her into a bear; she was caught by Aetolians and brought to her father Lycaon. Hyginus also records a version in which Hera transformed Callisto and Artemis later unknowingly slew her while hunting, and another in which Zeus himself turned her into a bear to hide her from Juno, who then directed Diana to shoot her.

According to the mythographer Apollodorus, Zeus disguised himself as Artemis or Apollo to seduce the sworn maiden. He then turned Callisto into a bear to hide her from Hera, but Hera asked Artemis to shoot the animal, and Artemis complied; an alternative has Artemis kill Callisto for failing to protect her virginity. Zeus took the child, named him Arcas, gave him to Maia to rear in Arcadia, and set Callisto in the sky as the Bear. Apollodorus is the only author to mention Apollo as the disguise.

In sum, either Artemis slew Callisto with her bow — to please Hera, as Pausanias and Apollodorus write — or her son Arcas nearly killed his bear-mother when she strayed into the forbidden precinct of Zeus. In every case Zeus placed both in the sky as Ursa Major, called Arktos (the Bear) by the Greeks, and Ursa Minor. According to John Tzetzes, Charon of Lampsacus held that Arcas was fathered not by Zeus but by Apollo.

The name Kalliste, "most beautiful," may be recognized as an epithet of Artemis herself, although the Athenian inscriptions recording priests of Artemis Kalliste date no earlier than the third century BCE. Her shrine lay outside the Dipylon gate beside the road to the Academy, and W. S. Ferguson suggested that Artemis Soteira and Artemis Kalliste shared a single cult and priest. Given the bearlike character of Artemis at the Brauronia, it has been proposed that the myths of Artemis's nymphs breaking their vows were originally told of the goddess herself, before she was recast as a sworn virgin defending her chastity.

The myth in the Catasterismi may derive from the fact that several constellations appear close together near the sign of Libra — Ursa Minor, Ursa Major, Boötes, and Virgo. Boötes was explicitly identified in the Hesiodic Astronomia as Arcas, the "Bear-warden" (Arktophylax), son of Callisto and Zeus, who lived around Mount Lycaon; that account adds that Lycaon, feigning ignorance, served the cut-up infant Arcas to Zeus at table.

The stars of Ursa Major were all circumpolar at Athens in 400 BCE and almost entirely so in Ovid's Rome, but precession of the equinoxes now causes the Great Bear's feet to dip below the horizon from those latitudes, while Ursa Minor remains wholly above it even as far south as Honolulu and Hong Kong. According to Julien d'Huy, who applied phylogenetic and statistical methods, the story may be a recent transformation of a Palaeolithic myth.

Callisto's story was occasionally depicted in classical art, where the moment of her transformation into a bear was most popular. From the Renaissance onward a series of history paintings, cabinet paintings, and book illustrations — usually titled "Diana and Callisto" — depicted the moment of discovery as the goddess and her nymphs bathed, following Ovid; the subject's appeal lay largely in the chance to show a group of nude female figures.

Titian's Diana and Callisto (1556–1559) was the greatest of these, soon disseminated by a print by Cornelis Cort. In it, as in most later versions, Diana points angrily while Callisto is held by two nymphs. Other treatments include works by Rubens, Rembrandt's Diana Bathing with her Nymphs with Actaeon and Callisto (which combines the scene with Actaeon's arrival), and earlier, less dramatic versions by Palma Vecchio and Dosso Dossi; Annibale Carracci's The Loves of the Gods shows Juno urging Diana to shoot the bear. Although Ovid sets the discovery in the ninth month of pregnancy, paintings generally show only a modest bump.

Callisto's seduction by Zeus in disguise was also a popular subject, usually titled "Jupiter and Callisto" — the clearest classical subject featuring lovers depicted as two women, with the pair shown happily embracing in a bower. It grew especially popular in the increasingly erotic eighteenth century, treated repeatedly by François Boucher and Jean-Honoré Fragonard. During the Nazi occupation of France, the resistance poet Robert Desnos used the myth in Calixto suivi de contrée as a metaphor for beauty imprisoned beneath ugliness. Aeschylus's tragedy Callisto is lost, but the figure returned to drama when Francesco Cavalli composed the opera La Calisto in 1651.

Callisto's parentage and identity vary across the sources: she is described as an Arcadian mountain nymph (an Oread) or as the daughter of King Lycaon of Arcadia. In still other accounts the mother of Arcas is not Callisto at all but Megisto, daughter of Ceteus and granddaughter of Lycaon, or else Themisto, daughter of Inachus.

By Zeus, Callisto was the mother of Arcas, the eponymous ancestor of the Arcadians, whose descendants in the genealogical tradition include Apheidas, Elatus, and Azan. As Ursa Major she was also known by the alternative name Helice; in one tale, when Demeter asked the stars about her abducted daughter Persephone, Helice directed the goddess to ask Helios the sun, who knew the deeds of the day, since the night was blameless.