|“||"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 Vishnu 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.
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, at some point in his travels, Jack had accidentally lost his katana down a pit.
Given that Jack is shown in one screencap holding a bloodied katana that looks similar to the one he lost, including the iconic black and gold tsuka-ito wrapping and hilt, it is likely that he will be reunited with it once more. 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.
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 katana is nothing without its original wielder.