When viewers first saw Phillip Chancellor, it was in a photo held by Jill Foster, while she told her mother, Liz, that she was going to marry a handsome wealthy man like him one day. Liz was an assembly line laborer at Chancellor Industries, and Phillip was CEO. Phillip was married to Katherine Chancellor, and they lived at the luxurious Chancellor Estate. Katherine's former husband Gary Reynolds and Phillip were college buddies, friends until Gary died, then Kay and Phillip grew close and eventually married. The company was originally the Reynolds family's company, but after Phillip took over running it, Katherine renamed it Chancellor Industries.

After many years of a loving marriage with Phillip, Katherine became an alcoholic and heavy smoker, and began having sex with the stable boys. She blamed it on boredom, Phillip's long hours, her fading looks, and her estrangement from her son, Brock. Phillip tried to convince her she was destroying herself, as well as their marriage. He suggested she find something to occupy her time or he would leave. Kay responded with a suicide attempt. Then Kay took a liking to her poor and innocent young manicurist, the same Jill Foster, so hired Jill as her paid companion, maid, and hairdresser. Jill liked Kay, and was very supportive in Kay's struggle with her vices. About this time, prodigal son, Brock returned home a changed man, now very religious and a practicing lawyer. Even Brock could not convince "The Duchess" to join AA. Phillip told Jill that although he knew he was falling in love with her, he would never leave Kay when she needed him. Witnessing their parting embrace, Kay realized she was losing him, began going to AA, and started bugging their conversations. Jill felt so guilty, she made plans to leave. Kay offered to pay for a college education, but Jill turned it down. Jill went to Phillip to say goodbye, but they ended up consummating their love with Kay watching.

Kay arranged for her son Brock, who was attracted to Jill, to propose. Jill accepted, and Brock married them himself. Before they consummated the marriage, Jill found out she was pregnant and told Phillip. Phillip was overjoyed, and asked Kay for a divorce, which sent her back to the bottle. Kay signed the papers in a drunken stupor, crossing out the property settlement because without him, she wanted nothing, not even the estate. Phillip flew to The Dominican Republic for a quickie divorce, while Jill broke the news to Brock who agreed to back out of their marriage, which was not legal anyway. Upon Phillip's return, he was met at the airport by Kay, who offered to drive him home. Kay made a last-ditch effort to convince Phillip to change his mind about their marriage. But when he turned her down, she hit the accelerator while rounding a curve, and the car sailed off a cliff. Kay sustained serious injuries, and Phillip was in critical condition. Jill hovered at his bedside. Phillip asked the hospital chaplain to marry them, and soon afterward Phillip died. Thus began the life long feud between Jill Foster and Kay Chancellor - Jill accusing Kay of murdering her true love, and Kay accusing Jill of stealing hers! Kay decided, in Phillip's memory, to go on the wagon for good.

Jill delivered a son, whom she named Phillip Chancellor III. Katherine tried to buy him from Jill for a million dollars, but instead Jill sued for half of Phillip's estate. Kay hired Attorney Mitchell Sherman to have Jill's marriage annulled, thereby stopping any inheritance, due to the fact that the divorce papers were signed when she was drunk. In retaliation, Jill planted alcohol around the estate to so Kay would go off the wagon, and also attempted to drive Kay insane.

"Little Phillip" was killed in a car crash at the age of 19. But in 2009 the body was exhumed and the coffin was found empty. Further tests showed there had never been a body in that coffin, just the bags of sand to give it weight. Phillip showed up saying that it was his doing. All were aghast to see Phillip again, still alive! Katherine had another mini-stroke and was rushed to the hospital by ambulance. Murphy, Jill and Nina were with her when Phillip arrived and assured everyone he was very much alive, explaining that at 19 he found himself overwhelmed with responsibilities as a young executive at Chancellor and a new father, an alcoholic in depression attempted suicide by crashing his sports car. When he awoke still alive in the hospital, he managed to pay off a doctor and a policeman to aid in faking his death, then escaped to Australia and began a new life as Langley who owned a bar. Then Phillip dropped the bomb on Nina, telling her that another reason he was so desperate to die or to leave was that he was, and is, gay.