About 500 years ago in Japan, a half-demon named Inuyasha, stole the Shikon no Tama, a sacred jewel, to become fully demon. But before he could escape with it, the injured priestess who was guarding it, Kikyo, seals him to a tree. She takes the jewel from him and requests to the villagers and her sister, Kaede, to burn the Shikon no Tama with her body. In present day Tokyo, Kagome Higurashi is at her house (which is also an old temple), her grandfather starts to tell her that there is a legend about the Shikon no Tama, but Kagome is more concerned with her upcoming birthday. The next day (Kagome's 15th Birthday) as Kagome heads off for school, she stops in front of the well located on the grounds, she sees a her brother, Souta, with a bowl. He thinks the family cat, Buyo, wandered into the well. Kagome and Souta then enter the well hut. Kagome approaches the well and gets Buyo. Suddenly, the top of the well bursts open and white ghost-like hands come out of the well and grab Kagome and she falls into the well. In the well Kagome, is attacked by a centipede spirit demanding the Shikon no Tama, which she thinks Kagome has. Kagome pushes the spirit away with a strange force and knocks an arm off while doing it. Kagome lands at the bottom of the well. To her surprise, when she gets out of the well she sees that she is a vast forest. Kagome finds the Sacred Oak (which is at her house) and sees Inuyasha sealed to it. Suddenly, Kagome surrounded my villagers, who assume she is out to harm them and their village. Kagome is brought to the middle of their village. The is approached by an old priestess, Kaede, realizes that Kagome isn't a demon but a human. Kaede also notices how similar Kagome looks to her late-sister, Kikyo.
Later that night, Kaede feeds Kagome some stew in her hut. Suddenly, the Centipede spirit attacks the village. Kagome leads the centipede away from the village. Kagome cries for help. Her cries awaken the sealed Inuyasha. Kagome soon reaches the tree, and sees that Inuyasha is awake. Inuyasha mistakes Kagome for Kikyo. But as Kagome corrects him, the centipede finds Kagome. Kagome clings to Inuyasha. The spirit attacks, and tries to pull Kagome off Inuyasha. Kagome knocks the remaining arms of centipede off. The villagers arrive and pull the spirit away from Kagome. The centipede bites into Kagome's side, revealing the Shikon no Tama. Kagome tries to retrieve the jewel but the spirit gets it first. With a boost of power, the centipede pins Kagome to Inuyasha. Inuyasha tells Kagome to free him. Kagome decides to free Inuyasha, much to Kaede's dismay. Inuyasha then kills the Centipede using his "Soul Reaving Iron Claw" (Sankontetsou). Kaede tells Kagome to remove the Shikon no Tama from the flesh, so the spirit doesn't regenerate. After the jewel is removed, Inuyasha demands that he has the jewel, Kagome is shocked to learn that Inuyasha isn't a hero, but a villain.