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The Werewolf, like many of JKR's magical creatures, originates from Greek mythology. The first Werewolf was Lycaon, the King of Arcadia, and it is after him that the condition of "lycanthropy" is named. Lycaon was a cruel king, and attempted to procure Zeus' favour by making an offering of the flesh of a child. Zeus was much displeased and turned Lycaon into a wolf. Werewolf legends spread from Greece across the whole of Europe, although they rarely, if ever, involved the full moon or the bite of the Werewolf at this stage. Instead, people either became Werewolves deliberately whenever they wanted to, carrying out rituals to achieve the effect, or were sometimes cursed into the state. Likewise, the story that a silver bullet was required to kill a Werewolf didn't surface until relatively modern times. As in the case of the Unicorn, the Werewolf was believed to be a real animal until the 1600s, and many people were actually tried for the crime of being one.
JKR's Werewolves follow the modern tradition and thus in the Harry Potter books, lycanthopy is contracted via the bite of another Werewolf. Anyone who has this disease will be normal for the majority of the time. At each full moon, however, they will transform into a ravenous psychopathic wolf-maniac that actively seeks out humans to kill. When the full moon has passed, the affected person returns to normal [FB]. Development of the Wolfsbane potion has relieved the suffering of those with lycanthropy: when taking this as a medicine, sufferers are transformed only into a harmless normal wolf at full moon rather than a Werewolf [POA18]. The Wolfsbane Potion was invented relatively recently by Damocles Belby, the uncle of Hogwarts student Marcus Belby [HBP7].
The Werewolf (in its transformed state) differs from the normal wolf in a number of ways. Its snout is differently shaped, the pupils of the eyes differ, and it has a tufted tail. There are two further differences that have not yet been revealed [OOTP28]. Snape deliberately taught Harry's class about Werewolves instead of their scheduled topic when he took over one of Lupin's DADA classes, in the hope that some of them might realise that Remus was a Werewolf himself [POA9].
The transformed Werewolf seeks humans to attack. Most of those savaged by a Werewolf will be killed in the process [POA14]. Those that survive have contracted lycanthropy and become Werewolves themselves. Of the two Werewolves currently named - Remus Lupin and Fenrir Greyback - Remus was actually infected by Fenrir in a revenge attack after Remus' father had offended Greyback [HBP16]. This is typical behaviour for Greyback, however, as he sees it as his mission to create a vast army of Werewolves in order to challenge the supremacy of normal people [HBP16].
The Ministry of Magic has always been a little bit confused about what to do with Werewolves. They have been shunted between being defined as "beasts" and "beings" on several occasions [FB]. There is currently some very restrictive anti-Werewolf legislation in place, which makes it virtually impossible for Lupin to get a job [OOTP18]. To be fair to the Ministry, with people like Greyback out there, this legislation is undoubtedly necessary.
Gilderoy Lockhart claimed to have defeated the Wagga Wagga Werewolf [COS10], although of course he didn't. His version of events included the use of the Homophus Charm, which he said turned the Werewolf back into human form. The Homorphus Charm may well be a real piece of magic (albeit way beyond Lockhart's feeble capabilities to perform). If this is true, the charm will only transform the Werewolf into its human state for a short period of time. It cannot do so permanently as it is known that there is no cure for lycanthropy
