Danielle Moonstar was a Native American of the Cheyenne Nation. After her mutant powers emerged at puberty, she could not control her ability to create visible images of people's greatest fears. Manifesting the images at unexpected moments alienated her from everyone in her community, except for her parents William and Peg Lonestar, and her grandfather, the chief, and shaman Black Eagle.
One night, Dani created a vision of her parent's deaths, and, shortly thereafter, her parents disappeared during a trip to the mountains. Moonstar thought they had been killed and began having nightmares of a demonic bear, whom she believed to be responsible for their deaths. In fact, Moonstar's parents had been transformed into the demonic bear. This bear intended to work the same transformation upon Moonstar, but the spells of Black Eagle kept the demonic bear away from her.
After her parent's disappearance, Moonstar was taken in by their friends, the Roberts. Danielle became close friends with their son, Pat. After she had been at the Roberts' home a week, Moonstar was at Sunday dinner with them, when Pat said something to her that provoked her. Moonstar lashed out at him with her psychic power and the images of the objects of Pat's greatest fear and desire appeared before Pat and his family. Moonstar then fled to the mountains, where Black Eagle raised her over the following years.
Looking to help his granddaughter, Black Eagle sent a letter to Professor Charles Xavier asking him to provide Moonstar with the training she needed to utilize her powers. Xavier was an army friend of Danielle's father and had become acquainted with Black Eagle. When Black Eagle asked Moonstar to go with Xavier, she angrily refused, believing all Caucasians to be her enemies. In her anger, Moonstar unintentionally created an image of Black Eagle's death as he had foreseen it in a prophetic dream. Black Eagle ordered her to go with Xavier and she agreed.
Before Xavier arrived, Black Eagle was murdered by agents of Donald Pierce, a member of the Inner Circle of the Hellfire Club who intended to overthrow its leader, Sebastian Shaw. Pierce was determined to kill Professor Xavier, as well as other superhuman mutants. Moonstar, unaware of Pierce's involvement, vowed to take vengeance for her grandfather's death.
Moonstar soon found herself hunted by Pierce's agents, but she was saved by the mutant Karma, who arrived along with Prof. Xavier. Dani agreed to work with Professor Xavier to get her revenge on Pierce.
After Moonstar helped Xavier and other young mutants he had enlisted in defeating Pierce, she and the other young mutants became members of his new team, the New Mutants, whom Prof. Xavier would train in the control and use of their powers at the School for Gifted Youngsters. Moonstar decided to remain with them to honor her grandfather's request, despite some initial reluctance. Dani became especially close to Rahne Sinclair (Wolfsbane), in part due to the psychic rapport they shared when Wolfsbane was in non-human form. Moonstar originally took the code name Psyche, but later changed it to Mirage.
Despite her power, Dani was a valuable member of the team in her own right, being the only one to pass the team's first test in the Danger Room. Although the team was originally created because the Professor was possessed by the Brood Queen's egg inside of him for future embryos, they stayed together. The team battled the powers of the Brood Queen inside of Professor Xavier that was using Dani's powers to create a horrific landscape.
Under Prof. Xavier's guidance, Moonstar not only learned how to keep her powers under control, so that she only used them when she so desired but also learned how to use her powers to create images other than those of the objects of people's fears. Following the departure of Karma, Dani and Cannonball became the team's leaders.
Some time afterward, Kitty Pryde was captured by the White Queen of the Hellfire Club, who was unaware the young X-Man shared a rapport with Magik. Sensing her friend was in danger, Illyana enlisted the help of the New Mutants and they charged to her rescue. Still, they were all captured and forced to attend the Massachusetts Academy, where the White Queen taught. There, a rivalry started between the New Mutants and the other young team of the Academy, the Hellions, which led them to secretly compete in a challenge, and, if the New Mutants won, the Hellions would allow them to escape. During the match, however, the White Queen appeared and chaos ensued. Nevertheless, the New Mutants managed to get away safely and return to Xavier's.[
With Black Eagle dead, the demonic bear was no longer prevented from seeking out Moonstar and she fought it outside the mansion, where it nearly killed her. Upon discovering Dani hideously mauled, the New Mutants rushed her to the Mid-County Medical Center. The Demon Bear was not through with Danielle and he infiltrated the hospital, thinking to finish the job and possess Danielle's soul. The Bear transported the team to the Badlands, presumably his dimension, where the New Mutants battled the bear. Her teammate Magik used her Soulsword to release Moonstar's parents from the spell they were under, returning them to their human forms. During this skirmish, the Demon Bear possessed Sharon Friedlander and Officer Tom Corsi and turned them into demonic Native American warriors under his control. They reverted back to normal humans, but Sharon and Tom still kept the appearance of Native Americans. Moonstar was reunited with her parents and she eventually recovered completely from her injuries, thanks to the Morlock Healer.
