|“||"This blade was forged from the righteous energy within thee. It possesses the power to destroy this evil force. But be warned, this evil is not of the human world. It has magic beyond your understanding. Trust not what you see, but what you feel."||”|
—Odin, Ra and Vishu, Episode XXXVIII: The Birth of Evil, Part 2
When Aku invaded Earth, the gods Odin, Ra, and Rama forged the katana from the power of righteousness within the Emperor's heart. Its divine nature is capable of inflicting burning wounds to Aku, which are very difficult for him to regenerate from. Enough hits with the katana essentially negates Aku's ability to regenerate from his wounds, at which point further damage could presumably either kill him or seal him away again. The katana can only be used for good; in the hands of evil, it cannot harm an innocent. This was first demonstrated on one occasion where Aku stole the katana and attempted to kill Jack with it. Instead of stabbing Jack, the katana simply struck Jack's chest without causing any harm at all.
However, this property appeared to apply only to biological lifeforms and not to robots, as Jack, when infected by Aku's essence to become Jack-Aku, either killed or grievously harmed an innocent robot with the katana, but appeared not to be able to kill the Lizard Monks whom he struck with it, only rendering them unconscious like a club would.
Very few characters other than Jack use the katana in the series, most notably the King of the Spartans in Episode XXV: Jack and the Spartans, after his own sword was broken and Jack threw him the katana to protect himself.
It was revealed in Episode XCII that, during his journey to access to presumed final time portal, Jack had accidentally lost his katana down a pit after killing innocent goats that were mutated by Aku's evil.
It was revealed that the Emperor had used the katana to kill bandits that threatened him and his family's lives in the third episode. It is later seen when he is cleaning the blood off of Jack, who witnessed the killings, albeit covered in blood as well as the Emperor's clothes.
In Episode XCVIII, Samurai Jack reunited with his katana by overcoming dangerous, physical and spiritual tests, with the aid of his new comrade and ally, Ashi. Jack regains the sword by overcoming his hatred, anger and frustration. The sword is returned by the three gods, and Jack is restored to his old self, full of confidence and hope. Samurai Jack is prepare to go and kill Aku once and for all and going back to home. However, in Episode C, after Ashi was corrupted by Aku and forced to fight him, Jack gave up and Aku managed to grab his sword.
In the finale, Jack and his sword were held up in different parts of Aku's lair. When Jack's friends broke him free, he attempted to reclaim the sword, only for Ashi to stand in his way. Once Ashi succeeded in breaking free, while keeping Aku's powers, she stretched her arm out and grabbed the sword (oddly, though she grabbed it by the blade, she was not hurt despite using Aku's powers), handing it to Jack before opening a portal back to the past.
Upon returning to Aku's lair in the past, Jack struck ruthlessly at Aku, vanquishing his essence bit by bit, despite his attempt to flee. As the last remnant of Aku attempted to run away, Jack stabbed him from above, imprisoning his essence in the blade. With a final strike to the ground, the darkness of Aku spread throughout his lair before exploding, leaving only a crater and destroying the threat of Aku forever.
After Aku's demise, Jack still keeps the sword for future use.
The katana has the power to cut through any mundane substance, given that there is enough force behind it (Jack was, for instance, unable to cut through the adamantium armor of the Ultra-Bots in episode XVIII without artificial strength enhancement). The katana is able to vanquish mystical beings that cannot be slain by conventional means such as the Minions of Aku, The Sirens and the evil spirit of the Well of King Ozric. Those beings were vaporized after being slain with the katana.
Likewise, similar magically enhanced objects can also prove immune to being cut by the katana (for instance, the Scotsman's blade was imbued with magic runes and proved to be too resilient for Jack to destroy). The katana is incapable of harming and destroying beings of divine origin such as the Minions of Set. The katana is also incapable of destroying the magical orb that imprisons the Fairy.
The katana itself, possibly due to its divine origin, seems to be essentially impervious to harm; it will simply rebound off of substances that it cannot harm instead of shattering upon impact, and can be used to block or deflect virtually anything without suffering damage. Unlike more mundane katana, which require extensive maintenance, Jack's katana appears not to require any sort of upkeep, though Jack was shown sharpening it on one occasion.
The katana's main purpose is to destroy Aku and defend the innocent; however, one very important aspect that Jack had failed to consider in his first battle with Aku, was that the sword is still just a tool, whose true power depends on its wielder.
It is also shown that if Jack is being consumed by the imbalance of his emotion and virtue, the sword will leave him since Jack can be considered to not be pure of heart enough to wield the sword, which is shown that the sword literally disappears from the bottom of the pit and only appears again when Jack finally overcomes his imbalance of negative emotion.
After Jack passed his spiritual test, the gods made the katana more powerful by extracting the strength and purity of Jack's own spirit and then infused them into it. This can be seen as a single slash was sufficient to burn a huge portion of Aku's mass and severely reduced his regeneration ability.