The System was the name of a computer network which was the controlling authority of a highly advanced alien civilisation, the original builders of the Liberator.
According to one of its slaves, the System came into existence towards the end of a three-way war between alien worlds far from Federation space. The computer systems of one planet took control of those of the others and the resulting network became the System.
The System ended the war and united the three worlds, but did not relinquish power. By the time of Blake's encounter with it the System was based on a giant space station known as Spaceworld, located in Sector 12, near astral point 781. The System had absolute power over the humanoids aboard it, which were treated as slaves. Its interactions with them were carried out through intermediaries known as the Altas, who appeared to be at least partly cybernetic themselves. The System had mastered a number of extremely advanced technologies, able to construct advanced artificial intelligences such as Zen, teleports, and ships much more powerful and sophisticated than anything built by humans.
One of the System's Deep Space Vehicles (the Liberator) had come into the possession of Blake and his followers and the System retrieved it and interrogated the crew. (The circumstances of how it had come to be drifting, unmanned, in Federation space were never elucidated upon.)
For all its sophistication the System was apparently unprepared for the unique abilities of Orac, which it used to disrupt the System's programming. Blake and his crew also managed to escape and take back the Liberator. System guards teleported onto the ship but were repulsed, their grenades exploding in the System's control centre. A second DSV was launched in pursuit of the Liberator but its systems were scrambled by Orac and it destroyed itself, allowing the crew to return to the territory of the Federation.
Whether the System or Spaceworld suffered permanent damage as a result of these events is not known.