Phoebe Forrester, along with her identical twin sister, Steffy, was born after a difficult pregnancy for Ridge and Taylor Forrester, who was stricken with tuberculosis. As children, Steffy fell overboard during a family boat trip in St. Thomas and was presumed dead in a shark attack. Two-year-old Phoebe didn't understand when her parents tried to explain that Steffy had gone to heaven. It turned out that Morgan DeWitt, who once had been forced by Stephanie Forrester to abort Ridge's child, had kidnapped Steffy and tried to raise her as her own. Once Ridge and Taylor rescued Steffy, Phoebe and Steffy developed a close bond. After Taylor was killed in an altercation with Sheila Carter, Ridge remarried Brooke, who helped raise Phoebe and her sister.Everyone was stunned when Taylor turned up alive; Taylor's former husband, Prince Omar of Morocco, had spirited Taylor away to his palace to heal her, planting a wax dummy in Taylor's grave. Phoebe's family was reunited until Taylor told Ridge that, long ago, she had slept with her friend James Warwick. After Ridge and Taylor's divorce, Phoebe and Steffy went away to boarding school in London. In 2006, Phoebe returned to Los Angeles alone, while Steffy stayed behind in Europe.
Phoebe got a flat tire on the way to the birthday party of her Uncle Thorne's daughter, Alexandria. Thorne's wife, Darla Einstein, arrived to help her change it. But Taylor also came to help, and Darla was killed as she fell into the path of Taylor's car. Taylor had been drinking, and Phoebe was terrified to lose her mother again, so she convinced Taylor to keep quiet. When the truth came out, Taylor did go to jail, but Shane McGrath testified that he had witnessed Darla's fall, and Taylor was set free. Phoebe and Shane dated briefly, but Phoebe's attentions soon turned to Rick Forrester.Even though Phoebe and Rick weren't technically related, their close proximity within the family caused an uproar for the Forresters, especially Ridge and Brooke. Phoebe went on a business trip to Australia as the new "Face of Forrester", where Ridge exploded after finding Phoebe in a clinch with Rick. Phoebe and Rick continued to see each other, although she was bothered by his past relationship with the worldly Ashley Abbott. Phoebe dreamed of becoming a singer and did some duets with Rick, attracting the attention of Constantine Parros. Constantine wanted to sign Phoebe to his label, Boldface Records, but a jealous Rick balked. Phoebe and Rick drifted further apart as Rick accused Ridge of killing Shane, then shared romantic moments with Ashley. Although Constantine was interested in Phoebe, and Rick wanted to make love to her, Phoebe ultimately rejected them both and went on a concert tour.
Phoebe came home from touring and found Rick in bed with her mother, Taylor, who felt guilty. After a time, Phoebe came to accept the relationship, although it ended when Taylor told Rick she'd always love Ridge. Steffy, now Phoebe's fraternal twin, came home from London and was soon propositioned by Rick. Phoebe was appalled that Rick had made moves on both her mother and her sister. Phoebe stormed into Rick's office and accused him of seducing all of them out of his lifelong hatred for Ridge. Rick got into his car to leave, but Phoebe jumped in with him, screaming at him, slapping him, and stomping on the pedals. Rick lost control of the car, and, because Phoebe hadn't put on her seat belt, she was thrown into a ravine. A bloodied Rick interrupted Ridge and Brooke's wedding rehearsal for help. Ridge ran to Phoebe, who weakly sang the song she had written for him, then died in his arms.
Phoebe's death resonated especially deeply for Taylor, who blamed herself, and for Steffy, who briefly entered into her own forbidden romance with Rick and never fully recovered from losing her sister.