According to most branches of Islam, Azazel is a high-ranking jinn, and was created out of smokeless fire by Allah (God in Islam). He committed a great sin when he refused to bow before the first human since Azazel himself was born from fire, while Adam was made from clay and thinking himself superior to them (though, in some variations, he refused to bow to Adam not out of pride, but out of love for Allah, and only knelt to Him, believing that only Allah deserved such a sign of obedience). As punishment, Allah damned him and banished Azazel, who changed his name to Iblis, to the fires of Hell, where he plots his revenge on mankind for his exile, and plans to ruin Paradise with his evil.
However, Iblis managed to persuade Allah to prolong the judgement until the End of Time, during which Iblis was granted permission to lead people astray, which he originally stated would be used to lead all humanity from Allah's path: Allah, however, ultimately stated “As for My servants, no authority shalt thou have over them.”
Iblis is considered to have only one true power, namely the ability to cast evil suggestions into the hearts of men, women, and jinn.
Iblis' ultimate fate (much like Satan's fate) is said to be eternal destruction at the hands of Allah at the Day of Judgement.