The Bottle Imp was a demon who either was a bottle, or had been transformed into one by a higher demon. For thousands of years he trapped people inside himself and an illusionary form tortured them. While on a beach, he captured two girls which was witnessed by Doctor Strange who followed the girls inside the bottle. The demon claimed that he had supposedly been imprisoned in the bottle by another, more powerful demon but that he now liked to use the bottle to trap and torment humans. Doctor Strange and the demon traded spells back and forth and Doctor Strange found he could apparently neither harm the demon nor break himself out of the bottle. Strange eventually realized his spell for harming demons actually damaged the glass bottle and eventually the spell destroyed both the bottle and the demon with it, because the bottle was the demon itself.
It is unclear whether the Imp's true form was a bottle and the demon completly lied, or whether the demon was transformed into a bottle and the demon only lied about what he had become.