Dharma is originally a precog of Idian nationality. His ability to see the future of things he touches has led to him being neither good or evil, but instead a force that acts when 'necessary'. Leading the Shadow Cabinet, Dharma seeks to save the world by sticking to the shadows and guiding major world events. He has known to do many things that would be called immoral in the name of greater good... including the creation of the Big Bang in the city of Dakota.
Most recently Dharma is responsible for bringing the beings of Milestone Comics to the DC realm. He absorbed the reality manipulating powers from a powerful enemy called the Rift. The Rift sought to destroy both Milestone and DC's worlds by merging them, but through the joint effort of both world's heroes the Rift was defeated. Dharma absorbed the Rift's powers and merged Milestone to DC because apparently Milestone's world had suffered a universe destroying event, and in order to save millions of lives he merged Milestone into DC. Officially only Icon, Superman, and Dharma himself even recall Rift and know the truth of Milestone's existence. Dharma is currently concentrating on keeping the worlds merged. This, according to Dharma, could months or even years before it is permanent.
The truth of Dharma's action are shown. It is revealed that he was responsible for the Big Bang, hoping to create powerful beings capable of preventing a fast approaching apocalypse whose cause he could not determine. When his last two prospects ( Hardware and Static), fail to meet his expectations, he turns to the only course he believes is left open to him....awakening and harnessing the powers of the god-like being called Rift. However, the very act of absorbing the being's powers causes widespread destruction to the universe, destroying the Dakotaverse. Thus the cause of the apocalypse he foresaw was his own attempts to stop it. However, all is not lost, as his new powers will allow him the opportunity to bring about his universe's rebirth. The effects of Darkseid's death during Final Crisis of a neighboring universe gives the chance to merge the remnants of the Dakotaverse into the DC Universe, retroactively combing their histories, and giving the Milestone characters the chance to live anew
Dharma originally was just a powerful precog, but after the events of Worlds Collide he gained the ability to alter reality and bend dimensions. At one point, in the original Milestone world, he absorbed his sisters known as Plus. This gave him the ability to control a living energy field that could be used for offensive as well as defensive purposes. It is unclear whether that power transferred over in the merge.