Sango steals the Tetsusaiga and is led to Naraku's castle. Sango tries to use the opportunity to kill Naraku, but she is seriously injured by an attack from Kohaku. Inuyasha and the gang catch up to her, but they are in danger from Naraku's miasma.
Kirara has been weakened by Naraku's poison. Inuyasha and Kagome go looking for an antidotal herb. Jinenji, a demon who is protecting an herb field, is actually a half demon and is picked on by the villagers because of his weakness.
Inuyasha and Miroku come across a cave when they go looking for the source of a strong evil presence. The Fuko no Jutsu has been placed on the cave. Hundreds of demons will fight to the death and are absorbed by the victors.
The Tenseiga and the Tetsusaiga, two great swords that were forged by swordsmith Totosai, have been left to Sesshomaru and Inuyasha by their father. Sesshomaru wants a sword to fight with and is unsatisfied with the Tenseiga, a healing sword.
Inuyasha and Sesshomaru continue fighting for the Tetsusaiga. After the fight, while Sesshomaru is recovering, a little orphan girl, Rin, tries to bring him food. When her village is attacked by wolf demons, Sesshomaru returns the favor and helps Rin. Meanwhile, Kagome senses a jewel shard. Inuyasha and gang follow her lead to the massacred village, where they are quickly surrounded by wolves and Koga.
Koga is the young leader of the demon wolf tribe, whose wolf minions were killed by Inuyasha. He places Shikon Jewel shards in his arms and legs, which he uses as weapons, making him an even match with Inuyasha. But it's Kagome who intrigues him...
Inuyasha and the group must battle the Birds of Paradise, before they can reach the wolf den. Meanwhile, back at the den, Koga expresses his true feelings for Kagome. When the final battle with the Birds ensues, will Inuyasha's jealousy cost Koga his life?
Kagome is angry that Inuyasha is suspicious of her relationship with Koga and returns to the present day. She goes back to school for the first time in a while, where she has to deal with the advances of yet another suitor.
While Inuyasha's gang follows a demon bear with a jewel shard, Koga meets with some demons from the northern pack who tell him about their plan to storm a castle where a man has many jewel shards. When the chase leads Inuyasha and his comrades to the castle, they meet up with Koga, who is furious at the slaughter of the wolf demons.
Sango and Miroku fight the Naraku puppet and Inuyasha and Kouga continue their fight (Kouga thinks Inuyasha killed his tribe). Koga beats Inuyasha and after that Kagura approaches him and brings the corpses of the dead wolf demons back to life. Koga then realizes that Kagura killed his comrades, but he can't move to attack her, because of fake Jewel shard in his hand! Kagura attacks him and prepares to take the shards in his legs, but Kouga is saved by Kagome who fires an arrow at Kagura and later Inuyasha who want to slash her with his Tetsusaiga. But Kagura, the ...
Miroku is reunited with Koharu, a girl he once made advances on. He leaves her in a certain village, where Kanna, the older sister of Kagura, appears. Kanna steals Koharu's soul with a soul-sucking mirror, and Koharu is manipulated along with the villagers into attacking Inuyasha and the others.
Kanna's mirror fails to absorb Kagome's soul, probably because of its size, but it reflects Inuyasha's Wind Scar, the Tetsusaiga's special technique. Inuyasha is injured by the blast of wind blasted back at him. Then Naraku appears.
Kaijinbo the swordsmith, manipulated by the sword Tokijin, charges at Inuyasha. In the end, he is wiped out by the force of the Tetsusaiga. All that is left is the Tokijin, which is untouchable because of the evil energy it emits.
Naraku's new minions, Juromaru and Kageromaru, attack Inuyasha and the gang. Koga comes to save Kagome from danger. He fights the two demons as he bickers with Inuyasha, but he struggles against Kageromaru, who digs underground.
Because of the incident with Koga, Kagome has a fight with Inuyasha and goes back to the present day. Meanwhile, Naraku wants to get rid of Onigumo's feelings for Kikyo by sending a giant Shinidamachu to kill Kikyo.
Kagome returns to the present day. She senses that Inuyasha has chosen Kikyo and wonders if she can ever go back to the past, but she still has the Shikon Jewel shards. She decides to give them back and put everything to an end, until she remembers her first meeting with Inuyasha when she stands before the Sacred Tree in the present day.
Sango's brother Kohaku is being manipulated by Naraku and is after Kagome's life. Inuyasha and the gang have been separated from Kagome, but Kohaku doesn't take Kagome's life. Sango rushes over and tries to kill Kohaku and herself in order to free him from Naraku's control, but Inuyasha stops her.
Just as Inuyasha and the gang overcome Naraku's trap involving Kohaku, Sesshomaru, who is investigating the secrets of Inuyasha's transformation, is visiting Bokusenno, a demon tree whose wood was used to make the sheaths for the Tetsusaiga and the Tenseiga.
Inuyasha transforms into a demon when his life is in danger. He quickly destorys Gatenmaru, who has become a giant moth. He attacks the escaping bandits with his claws, and he cannot hear Kagome trying to stop him.
Inuyasha visits Totosai's workplace by himself. The Tetsusaiga was broken by Goshinki, and Inuyasha's own fang was used to repair it. Inuyasha's fang isn't compatible with that of his great demon father, so the Tetsusaiga has become heavier.