The Chancellors were the regime of spellcasters that fostered the Xie dynasty of Alterac over many generations, up until their dissolution with the introduction of the Perenolde bloodline.
Originally, they were Archivists, witnesses of the climatic battle at Ythan'alai. In that battle, Xaxion Drak'eem killed Akaerna-Sagai and Xostheron, but lost his physical form in the process. Giren and his Archivists then absorbed the power of the dead gods and began writing the Prophecies. Those that chose to use the Prophecies and the gift of the dead gods became the Chancellors.
Long ago, the kingdom of Alterac saw the birth of a new ruler; that ruler was to be the first of then known has Kravekat bloodline. A special circle of magi then pledged themselves to preserve the new dynasty, and to ensure that the sacred family maintained the special gift that had ingrained itself in all subsequent offspring. Legend had it that the gift in the Kravekat bloodline was a connection to the kingdom of Alterac itself, and a certain affinity for seeing into the future, or reading events in a fashion which was unnatural to lesser men.
To preserve this gift, the Chancellors created a special breeding programme for the bloodline, and manipulated every last king and queen to be born into accepting and appreciating it. In truth, the routine was an exercise of repeated inbreeding, reducing the strength and mental stability of the Xie children that were born to rule the kingdom. So desperate were these Chancellors to ensure that no trace of the special gift ever escaped the flesh of their ruler, that they eventually sired a degenerate monarchy.
By the time of the Great War of Lordaeron, the ruling Xie was crippled in the mind.
The Chancellors had no interest in relinquishing their plot either. To this end, one Chancellor rose above the rest to set things right. This man was Caxagord. Possessing pity for Xie and a caring for the kingdom that no other Chancellor shared or understood, Caxagord orchestrated a turning point. By the end of his plan, he had turned Xie towards the truth and had used him to have most of the other Chancellors executed. This left Caxagord as one of the only sane powers in the kingdom, and had given him indirect and absolute power. Nonetheless, he did hope to see Xie free of his disabilities and pave the way for a brighter future.
It was not to be so. Several Chancellors had escaped the purge; soon, Gabranth had ensured the deposition of the previous General of the kingdom, Pierronne Drace. As new General of Alterac, Gabranth had closer ties to his king and could maintain some influence in court. He even masterminded the training of a generation of magically talented assassins; the Assassin-Magi. Nonetheless, Caxagord had long since established an uneasy truce with Gabranth. Gabranth had little interest in exploiting Xie; his interests lay in conquest of territory.
The real problem arose when Chancellor Bergan resurfaced, the previous chief of his council and the most powerful sorceror in the kingdom. Turning Xie against Caxagord just as Caxagord had turned Xie against the old Chancellors, Bergan succeeded in wrenching power back into his own grasp. At the council of Fenris Keep, Bergan made his return, and attempted to execute Caxagord.
By some miracle, Caxagord survived, but not before Bergan was back in power.
Alterac survived for a while longer under the Chancellors, but eventually, the Perenolde dynasty took over by the end of the Great War, and the Chancellors were mostly lost to history by that time. Without a ruling Xie to manipulate, they became obsolete, and almost all of them had been killed.