In feudal Japan, the half demon Inuyasha was sealed away by the priestess Kikyo. Many years later he is revived by Kagome, who has slipped through time from the present day. Kagome is surprised when the sacred Shikon Jewel, which makes demons stronger, emerges from a cut on her body.

Kagome finds out that she may be the reincarnation of Kaede's late older sister, the priestess Kikyo, who sealed Inuyasha with her arrow. The Carrion Crow demon is after the Shikon Jewel and kidnaps Kagome, but Inuyasha shows up to save her. After Kagome defeats the Carrion Crow with an arrow, the Shikon Jewel shatters into pieces.

Kagome has the ability to see pieces of the Shikon Jewel. Inuyasha has the power to defeat demons. Both of their powers are needed to gather the shards of the jewel that were scattered, but the two don't get along. The demon Yura, who is after the jewel, manipulates villagers to attack Inuyasha.

Kagome has returned to the present day and is relaxing in her home when Inuyasha comes looking for her. Some of Yura's demonic hair is on his body. Kagome and Inuyasha return to feudal Japan to exterminate the Yura of the hair.