A friend of Harry's father, when at school, he was assigned the nickname "Moony" as he was bitten by a werewolf as a child (and is consequently one now). The "Shrieking Shack" in Hogsmeade is the place where Lupin was taken while at school during his time of transformation, so as not to be a danger to others. He was smuggled there via the secret passage under the whomping willow tree, which was planted for him in his first year there at Hogwarts. He comes to Hogwarts years later (Book 3) as a Defence Against the Dark Arts Teacher.
During his time as a teacher, he was fed a potion by Snape to keep him tame in his wolf state. Lupin was Harry's favourite teacher and in his spare time he taught Harry to defend himself against Dementors. Lupin features in the ending of the third book where he hears Black's story and joins sides with him. At the end of the third book Snape reveals that Lupin is a werewolf which forces Lupin to leave the school. However he reappears later as a member of the Order of the Phoenix in Book 5.
Remus is perhaps derived form the famous Romulus and Remus, the founders of Ancient Rome. The Legend says that the two boys were orphaned and raised by a wolf. Lupin also comes from the Latin word for wolf, lupus.