The cage's operation depends on the theory that an external static electrical field will cause the electrical charges within the cage's conducting material to redistribute themselves so as to cancel the field's effects in the cage's interior. This phenomenon is used, for example, to protect electronic equipment from lightning strikes and other electrostatic discharges.

Faraday cages cannot block static and slowly varying magnetic fields, such as Earth's magnetic field (a compass will still work inside). To a large degree though, they also shield the interior from external electromagnetic radiation if the conductor is thick enough and any holes are significantly smaller than the radiation's wavelength. For example, certain computer inspection and/ortest procedures of electronic components or systems that require an environment not influenced by electromagnetic interference are usually conducted within a Faraday Cage (screen room). These screen rooms are essentially work areas that are completely enclosed by one or more layers of fine copper mesh. The screen layers are often grounded to dissipate any electric currents generated by  the external electromagnetic fields and therefore should block a large amount of the electromagnetic interference.

External radio signals (electromagnetic radiation) through an antenna within a cage can be greatly attenuated or even completely blocked by the cage itself.

Several years prior to Faraday's, Benjamin Franklin observed the effect by lowering an uncharged cork ball into a can which was suspended on a silk thread through an opening. His conclusion was "the cork was not attracted to the inside of the can as it would have been to the outside, and though it did touch the bottom, when drawn out it was not found to be electrified by that contact, as it would have been by touching the outside." The fact is singular." Franklin had discovered the behavior of what we now refer to as a Faraday cage or screen room.

If a charge is placed inside an ungrounded Faraday cage, the internal face of the cage will be charged (in the same manner described for an external charge) to prevent the existence of a field inside the body of the cage. However, this charging of the inner face would re-distribute the charges in the body of the cage. This charges the outer face of the cage with a charge equal in sign and magnitude to the one placed inside the cage. Since the internal charge and the inner face cancel each other out, the spread of charges on the outer face is not affected by the position of the internal charge inside the cage. Basically, the cage will generate the same electric field it would generate if it was simply charged by the charge placed inside.

When the cage is grounded, the excess charges will go to the ground instead of the outer face, so the inner face and the inner charge will cancel each other out and the rest of the cage will remain neutral.

Effectiveness of shielding of a static electric field depends upon the geometry of the conductive material. In the case of a non-linearly varying electric field, and hence an accompanying varying magnetic field, the faster the variations are (i.e., the higher the frequencies), the better the material resists penetration, but on the other hand, the better it passes through a mesh of given size. In this case the shielding also depends on the electrical conductivity of the conductive materials used in the cages, as well as their thicknesses.