Chinese characters evolved over time from earlier forms of hieroglyphs. The idea that all Chinese characters are either pictographs or ideographs is an erroneous one: most characters contain phonetic parts, and are composites of phonetic components and semantic radicals. Only the simplest characters, such as ren 人 (human), ri 日 (sun), shan 山 (mountain; hill), shui 水 (water), may be wholly pictorial in origin. In 100 CE, the famed scholar Xǔ Shèn in the Hàn Dynasty classified characters into six categories, namely pictographs, simple ideographs, compound ideographs, phonetic loans, phonetic compounds and derivative characters. Of these, only 4% were categorized as pictographs, and 80–90% as phonetic complexes consisting of a semantic element that indicates meaning, and a phonetic element that indicates the pronunciation. There are about 214 radicals recognized in the Kangxi Dictionary.

Modern characters are styled after the regular script (楷书／楷書 kǎishū) (see styles, below). Various other written styles are also used in East Asian calligraphy, including seal script (篆书／篆書 zhuànshū), cursive script (草书／草書 cǎoshū) and clerical script (隶书／隸書 lìshū). Calligraphy artists can write in traditional and simplified characters, but tend to use traditional characters for traditional art.

There are currently two systems for Chinese characters. The traditional system, still used in Hong Kong, Taiwan, Macau and Chinese speaking communities (except Singapore and Malaysia) outside mainland China, takes its form from standardized character forms dating back to the late Han dynasty. The Simplified Chinese character system, developed by the People's Republic of China in 1954 to promote mass literacy, simplifies most complex traditional glyphs to fewer strokes, many to common caoshu shorthand variants.

Singapore, which has a large Chinese community, is the first—and at present the only—foreign nation to officially adopt simplified characters, although it has also become the de facto standard for younger ethnic Chinese in Malaysia. The Internet provides the platform to practice reading the alternative system, be it traditional or simplified.

A well-educated Chinese reader today recognizes approximately 5,000–7,000 characters; approximately 3,000 characters are required to read a Mainland newspaper. The PRC government defines literacy amongst workers as a knowledge of 2,000 characters, though this would be only functional literacy. A large unabridged dictionary, like the Kangxi Dictionary, contains over 40,000 characters, including obscure, variant, rare, and archaic characters; fewer than a quarter of these characters are now commonly used.