Introduction
Sati is a daughter of the Prajapati Daksha and Prasuti, and the first wife of Shiva. Her death at her father's sacrifice, and her rebirth as Parvati, are central events of Shaiva mythology, and give the Sanskrit word "sati" its meaning of a devoted wife who dies for her husband's honour.
This article follows the Puranic tradition. Where a detail differs between texts, the article says so.
Family
Marriage to Shiva
Against her father Daksha's wishes, Sati chose Shiva as her husband through her own devotion and austerity. Daksha, who disapproved of Shiva's ascetic ways and unconventional appearance, never fully accepted the marriage.
Daksha's sacrifice
Daksha held a great sacrifice and deliberately did not invite Shiva, as a further insult. Sati attended anyway, uninvited, hoping to reconcile her father to her husband, but Daksha insulted Shiva publicly before the assembled gods and sages. Unable to bear the humiliation of her husband, Sati gave up her own life at the sacrifice, in most versions by entering a yogic fire of her own making.
Aftermath
Shiva, on learning of her death, was overcome with fury and grief. From his hair he created the fierce Virabhadra (and, in some versions, Bhadrakali), who destroyed Daksha's sacrifice and beheaded Daksha, who was later restored to life with the head of a goat, after Shiva relented.
In a further development of the story, Shiva carried Sati's body across the world in his grief, until Vishnu's discus cut it into pieces, which fell in various places, becoming the Shakti Peethas, sacred sites of the Goddess.
Rebirth as Parvati
Sati was reborn as Parvati, the daughter of Himavan and Mena, and, after a long courtship, married Shiva again, resuming their relationship in a new life.