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A common theme to theories of karma is its principle of causality. One of the earliest association of karma to causality occurs in the Brihadaranyaka Upanishad of Hinduism.

The relationship of karma to causality is a central motif in all schools of Hindu, Jain and Buddhist thought. The theory of karma as causality holds that executed actions of an individual affects the individual and the life he or she lives, and the intentions of an individual affects the individual and the life he or she lives. Disinterested actions, or unintentional actions do not have the same positive or negative karmic effect, as interested and intentional actions. In Buddhism, for example, actions that are performed, or arise, or originate without any bad intent such as covetousness, are considered non-existent in karmic impact or neutral in influence to the individual.

Another causality characteristic, shared by Karmic theories, is that like deeds lead to like effects. Thus good karma produces good effect on the actor, while bad karma produces bad effect. This effect may be material, moral or emotional - that is, one's karma affects one's happiness and unhappiness. The effect of karma need not be immediate; the effect of karma can be later in one's current life, and in some schools it extends to future lives.

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The consequence or effects of one's karma can be described in two forms: phalas and samskaras. A phala (literally, fruit or result) is the visible or invisible effect that is typically immediate or within the current life. In contrast, samskaras are invisible effects, produced inside the actor because of the karma, transforming the agent and affecting his or her ability to be happy or unhappy in this life and future ones. The theory of karma is often presented in the context of samskaras.

Karmic principle can be understood, suggests Karl Potter, as a principle of psychology and habit. Karma seeds habits (vāsanā), and habits create the nature of man. Karma also seeds self perception, and perception influences how one experiences life events. Both habits and self perception affect the course of one's life. Breaking bad habits is not easy: it requires conscious karmic effort. Thus psyche and habit, according to Potter and others, link karma to causality in ancient Indian literature. The idea of karma may be compared to the notion of a person's "character", as both are an assessment of the person and determined by that person's habitual thinking and acting.