Magic is a central theme in The Tempest, shaping almost every event in the play and giving it a fairy tale-like atmosphere. It's essential to note that during Shakespeare's time, magic was perceived much more seriously than it is now. Renaissance thinkers, such as Henry Cornelius Agrippa—whose works Shakespeare might have been familiar with—were knowledgeable about magic and wrote extensively on its various sources of power. Essentially, Shakespeare's audience would have been aware of two kinds of magic: white (benevolent) and black (malevolent). Within this context, Prospero would likely have been seen as a theurgist, a practitioner of white magic. This form of magic, believed to be divinely sourced, involves manipulating natural elements and is closely linked to natural sciences like alchemy, the precursor to modern chemistry. In contrast, black magic plays a minor role in The Tempest. It was thought to derive from demonic origins and may have been the type of magic practiced by Caliban's mother, the witch Sycorax.

Prospero and his servant, Ariel, are the main magical practitioners in The Tempest, both using powers of illusion and deception. At Prospero's directive, Ariel conjures a violent storm at the beginning of the play, making it seem as though Alonso's ship is destroyed and its passengers are stranded on the island. However, by the end of the play, the Boatswain reveals that the ship "Is tight and yare bravely rigg'd, as when / We first put out to sea." Similarly, Prospero uses his magic to confuse and separate the new arrivals on the island, causing each to believe the others have died in the storm.

Prospero's use of magic to manipulate others underscores one of the play's key themes: the difference between appearance and reality. As the illusions fade away at the end, Shakespeare underscores the theme of disenchantment, bringing back reality. This is particularly apparent in characters like Caliban, who rejects his former servitude, and Alonso, who repents for his past misdeeds against Prospero.

Another important perspective is the comparison of Prospero's magical skills to an artist's craft—specifically, Shakespeare's ability to manipulate reality through art. Some biographical interpretations of The Tempest suggest that Prospero symbolizes Shakespeare himself, with the play representing Shakespeare's farewell to the theater. Evidence supporting this view can be found in Prospero's continuous orchestration of scenes and events: he stages masques, creates illusions, directs the island's inhabitants, and ultimately addresses the audience in the epilogue, asking for applause: "But release me from my bands / With the help of your good hands: / Gentle breath of yours my sails / Must fill, or else my project fails, / Which was to please." Thus, Prospero's "project" echoes Shakespeare's own intention—to entertain (and perhaps enlighten) his audience. In this way, Prospero's magical manipulations parallel Shakespeare's artistic endeavors in creating the play.