Warhammer is among the oldest of commercial fantasy worlds, which draws inspiration from Tolkien's Middle-earth, but the 1st edition also cited Robert E Howard (Conan the Barbarian) and Michael Moorcock as having a major influence on fantasy table-top games. What is recognizable as the Warhammer World began with the first edition of the game, but it evolved as its own setting with the release of Warhammer Fantasy Roleplay in 1986 and the 3rd edition of Warhammer Fantasy Battle in 1987.

Warhammer has developed a very recognizable stylistic image set. Skulls feature prominently, as well as gothic architecture, absurdly large weapons and shoulder-armor, and bizarre imagery reminiscent of director Terry Gilliam's work, as well as a strong dose of black comedy. From its inspiration from Michael Moorcock's novels, the Warhammer World is centred on the classic Man vs. Himself literary theme. The Chaos Gods are the flaws of humankind personified; the inner literal daemons of living things come back through a magic medium to torment and kill. The ultimate victory of these forces is often hinted at, highlighting a strong assumption that sentient beings are fundamentally flawed and will eventually bring about their own destruction via the forces of Chaos. This is especially tragic in light of the outside, non-Chaotic forces that threaten civilized beings, including rampaging Orcs, political strife, and general warfare.

The forces of Chaos were introduced into the Warhammer World by the "Old Ones": star-travelling gods responsible for the creation of most of the setting's sentient races. These Old Ones were brought low by the daemonic forces inadvertently unleashed by the collapse of their Warp Gates (one at either pole), leaving their creations to fend for themselves. This backstory also provides an easy explanation for the variety of familiar fantasy races, and provides a logical framework for them to fit in. Ogres and Halflings, for example, are closely related. Both are resistant to the mutating effects of Chaos energies (fuelled by hearty appetites and efficient metabolisms), but have opposite physical templates.

The Warhammer World borrows considerably from historical events and other fantasy fiction settings. The Old World is recognisably Europe approximating to the Renaissance period - the Empire being set over what is modern Germany. Many events are lifted and modified directly from real-world history, including the Black Plague and the Moorish invasion of Spain, and others from original fantasy sources. Like Middle-earth, Warhammer's Elves are declining in population, and a Great Necromancer is reborn after the defeats in his Southern stronghold.

Of the races that inhabit the world, Rick Priestley identified their origins as being based on British themes, the dwarfs are like blunt-spoken Yorkshire men, Elves having a touch of Southern England and received pronunciation about them, and the Orcs speaking with a working class London accent.