The sword was wielded by the lazy warrior-turned-hero Nagi. He used Tsukuyomi during his battle with Orochi. The battle seemed lost until Amaterasu uses Crescent and granting Nagi a new found strength that allowed him to slay the demon. The sword was enshrined in the Moon Cave and was used to seal Orochi.
Many years later, Orochi returned after Nagi's descendant, Susano, removed Tsukuyomi and in doing so broke the seal that was binding Orochi's dark spirit. The revived Orochi consumed Tsukuyomi to prevent anyone from using it against him again. When Kushi was chosen as a sacrifice for Orochi, Amaterasu and Susano came to her rescue. Amaterasu removed seven of Orochi's heads. Susano raised his sword to the moon and like his ancestor before him, was granted a strength he had never known. The power made his wooden sword glow gold. Susano struck the final blow, decapitating the final head and defeating Orochi once and for all.
- Tsumugari being recovered from Orochi's remains is a reference to how the Blade of Kusanagi was obtained by the Japanese god Susanoo.
- After the battle with True Orochi, Nagi calls his sword Bokunenjin instead of Tsukuyomi. From the prologue, it can be inferred that the sword was renamed Tsukuyomi after Shiranui's demise, when it was placed inside the Moon Cave to seal Orochi away.
- Tsukuyomi is named after Tsukuyomi, the Shinto god of the moon, son of Izanagi and brother of Susanoo and Amaterasu