Alice is the spirit of a doll possessed by the vengeful "Doll Chimera" card. Her character is based on the title character of Alice's Adventures in Wonderland. She wore long dark gray hair and dresses in gothic lolita-style clothing.
She and her Deck carry many references to the anime Rozen Maiden, such as her Deck containing dolls attempting to be perfect, and Moon Phase, with her having changed from being mean to being kind once the moon had come out from behind the clouds. Both of these series were heavily influenced by Alice in Wonderland.
When some Obelisk Blue students Dueled, Alice watched them. When one student in particular lost, he blamed his loss on his "Doll Chimera" card, calling it useless trash and insisting he'd start winning again after he got rid of it. The same student later rips his "Doll Chimera" in half, and all the anger and pain of the card seeps into Alice. In the dub Alice explains that all the negative energy caused a darkness to enter her spirit. From that point onwards, Alice disliked all Duelists for she had the conception they were all heartless creatures.
When Jaden and his friends return from Domino City, "Winged Kuriboh" detects that Alice is a stranger. Alice poses as a transfer student into the Slifer Red Dorm, and is nice to the rest of the Slifers, cleaning their dirty rooms and even preparing food for them, which causes Tyranno Hassleberry to fall madly in love with her. Bastion Misawa claims he has seen Alice somewhere before, but Syrus Truesdale tells him that "that line never works." (In the Japanese episode preview, Bastion is seen researching Alice on his computer, and comes up with a positive image: "Alice in Despairland").
However, later that night Hassleberry disappears. Jaden goes to investigate and discovers Bastion unconscious under a tree in the forest. Bastion has no memory of how he got there, claiming he "must have blacked out" (It is indicated that Alice also kidnapped him). Together they find Hassleberry, and Alice appears (Cut from the dub is the scene of Alice walking on water). They learn that Alice has kidnapped Tyranno and is using him as hostage to challenge other Duelists. She claims she posed as a transfer student of Slifer Red in order to seek out victims to plunge into darkness (In the dub, when asked by Jaden who she really is, she claims that she is "a disposable soul, just like everyone.")
She continues to issue several macabre statements until asked by Jaden why she's doing all this. She replies that all Duelists unleash despair on the world, and that she's here to change that. Alice justifies that all happiness is an illusion; and thus, she's here to erase that false happiness. In the Japanese version, Alice wants to crush all the light of hope from Duelists. She challenges Jaden to a "Duel of Despair," in which he replies it will be a "Duel of Hope".
At the beginning of the Duel, Alice displays a chilling sense of purpose, sacrificing her cards and Life Points without any hesitation so she can Summon her "Doll Chimera". As the Duel progresses, however, Alice's anger and bitterness slowly fades away to Jaden's cheery personality and the honesty of his happiness when he Duels. She starts to realize Dueling is actually fun.
After Jaden forces Alice to send all the "Doll Part" monsters in her Deck to the Graveyard, he finally manages to destroy "Doll Chimera". As the moon shines through the clouds, Alice reveals that she is in fact a doll spirit. As a doll in her glass case, she would watch the students Duel each other.
She was finally quelled when Jaden destroyed "Doll Chimera", thus freeing her from its vindictive influence. Upon losing the Duel, Alice turns back into her doll form and thanks Jaden for setting her free.