Shift, a Narnian ape, had been conspiring with the Tisroc, planning the overthrow of Narnia, for a long time. One day, as he was walking by Cauldron Pool with his friend Puzzle, they found the skin of a dumb lion who had been killed by a hunter in the Western Wild. Shift, ignoring Puzzle's protests, sewed the skin into a "fine new winter coat" for Puzzle, as he said. Gradually, he persuaded the donkey that Aslan wanted him to dress up in the lion skin so that Shift could use the Lion's authority to "put everything right" in Narnia. Although Puzzle was hesitant, he knew that Shift was far cleverer than himself and thought that the ape must know what Aslan would want, so he agreed.
In the "Myth"
Tashlan was a Demon/Deity who appeared as a lion. He could shift to his Calormene form, a demonic monster with a head of a bird and many arms.
Tashlan, or rather Shift's imitation of Aslan's appearance, was in reality Puzzle dressed in the lion-skin found in Cauldron Pool. Shift altered the lion-skin to fit Puzzle by cutting some skin out of the body and using it to lengthen the neck. The final result was not very convincing, and could only really be mistaken for a lion by someone who had never seen a real lion, and only in bad light. Nevertheless, it was enough to convince the Talking Beasts.
Shift's Rise to Power
Shift used the animals' firm faith in and longing for Aslan's return to facilitate his rise to power. He allowed Puzzle in the lion's skin to be sighted by several animals to start rumors, and then presented him openly to all the beasts and used Aslan's authority to cut down a large lane of trees in Lantern Waste (thus killing many Dryads) and send the lumber to Calormene. Shift brought Puzzle out of the stable on Stable Hill only as often as was necessary to keep the beasts convinced, and only at midnight. Aside from these brief outings, Shift kept Puzzle inside the stable, and often forgot to feed him.
When Tirian, Eustace, and Jill went back to Stable Hill to rescue Jewel, Jill snuck into the stable to see what Shift's Tashlan really was, and found Puzzle. She rescued him from the stable, protected him from Tirian (who wanted to kill him for dressing up as Aslan), and the three planned to show him to the Talking Beasts, thereby exposing Shift's lies.
Tirian did, in fact, show Puzzle to a company of dwarves whom some Calormene guards were marching to Calormene to work in the Tisroc's mines. The dwarves saw that they had been taken in and helped Tirian kill the soldiers, but all but one then refused to believe in the real Aslan. In the words of Aslan, they were so afraid of being taken in that they could not be taken out.
Shift's New Lie
The dwarves' response was a warning to Tirian, and he decided to wait to show the other animals the truth. Just as they were about to reveal him to all the animals at once, Shift told the animals about a "wicked beast" who had dared to dress itself up as Tashlan, thereby spoiling Tirian's ability to communicate the truth that way. Jill quietly took the lion-skin off the donkey, and that was the end of any physical representation of Tashlan.