Warning: Wikipedia contains spoilers.
In Harry Potter and the Prisoner of Azkaban, it is revealed that the rat is actually a wizard named Peter Pettigrew (nicknamed Wormtail) on Voldemort's side, who was able to magically transform himself from human to rat and back again. (This is due to his status as an Animagus.) Peter had once been a schoolmate and friend of Harry's father.
It had been thought that Wormtail was murdered by Sirius Black, along with twelve muggles, and that all that had been recovered was part of one of his fingers. In ...Prisoner of Azkaban it is revealed that Pettigrew had been secret keeper for the Potters, in Black's place, and that when Black realised that Pettigrew had betrayed the Potters to Lord Voldemort he tracked him down. Pettigrew was prepared for this; after killing twelve innocent bystanders he cut off his finger, before transforming into a rat and disappearing, leaving Black to face the charges of murder.
Pettigrew then spent the next twelve years as a pet, first owned by Percy Weasley, then owned by Ron, in hiding from Voldemort's supporters—they would suspect him as a traitor, since his information regarding the Potter's whereabouts lead to Voldemort's fall. Pettigrew later faked his own death a second time, to avoid Crookshanks, who was trying to bring him to Sirius Black.
In Harry Potter and the Goblet of Fire, Wormtail gives his hand to aid Lord Voldemort's return.
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