The episode begins with Sesshomaru standing on a rocky cliff. Rin is picking flowers with Jaken. Sesshomaru is remembering Kagura's death. Then, Totosai appears and says that Tenseiga called him here. Totosai tells Sesshomaru that his heart has changed and it's time to reforge Tenseiga into a weapon.
Shippo is back in the village telling Kaede about Kikyo taking Midoriko's soul, and Kohaku running away.
Sango and Miroku are sitting together talking, when Shippo and kaede join them. They discuss Naraku and Midoriko's wishes. There is a flashback to InuYasha and Kikyo's conversation at the waterfall. Then, they talk about Kohaku's life and wishes. Miroku says they must all stay united.
Kagome and her school friends are turning in applications for high school. Kagome is behind in her studies, so she goes home to catch up.
Kagome is studying hard in her room when she falls asleep. InuYasha wakes her up.
InuYasha and Kagome are back in the feudal era, when Shippo is knocked out by some fox fire, and InuYasha runs ahed to see the demon up ahed. InuYasha and friends stumble upon the "Demon Mansion Inn" and decide to stay the night. Later in the mansion, Miroku is being surrounded by women, which made Sango angry, but Miroku is content. Then some papers fall out of the sky and the girls all exclaim that they have "jumped 3 ranks". Then they turn into fox demons and disappear. Sango tells Miroku he was decieved by them, while Kagome wonders where Shippo is.
Shippo wakes up surrounded by 3 young fox demons who are calling him "Number 77". The fox demons notice Shippo is holding an exam ticket for "The Demon Exam". The fox demons tell Shippo that in the Demon Exam there are 30 possible ranks. The best is top rank, then 2nd rank, etc. The lowest rank is 30th. It takes hundreds of years to reach top rank. They say that if they bewitch the people staying at the Inn (iNuYasha and friends) they will get alot of points. The fox demons say that the Inn they are staying at is really their exam site. The 3 fox demons see Kagome and decide to go after her. Then, InuYasha came up behind Shippo and made a rude comment, so Shippo used one of his tricks on InuYasha, and ran to go help Kagome. Shippo stopped because he got a piece of paper from the sky that said "25th Rank", which means that Shippo moved up 5 ranks.
The 3 fox demons try to scare Kagome, but they are unsuccessful. Inuyasha punches the 3 demons, and they each fail that attempt. They leave, stating that they will "never foget this."
The 3 fox demon meet up with shippo and are astonished that he is already up to 25th rank after his first attempt at the exam. Shippo wonders if this is because he "beat up InuYasha." The fox demons ask Shippo if it's hard to attack his friends, and Shippo dramatically says that it is hard, but he must do this. They 3 demons want to see how far Shippo can go.
InuYasha and friends are wondering where Shippo is, when Shippo tricks InuYasha , and the 3 fox demons trick Kagome. Shippo is mad that he is still only 25th rank. In another room, many fox demons are going up in rank because they transformed into women for Miroku. Sango gets rid of all the demons, for now.
Later, InuYasha and Kagome, and Sango and Miroku, are all being decieved by these demons continually. Miroku says that they are good at finding people weaknesses.
Meanwhile, Shippo tricks Inuyasha again, and only needs 2 more points to move up another rank. The exam ends at dawn, and Shippo quickly tricks Inuyasha again, so he moves up to 24th rank. Shippo leavs while being idolized by the three fox demons.
The next morning, after leaving the Demon Mansion InuYasha and Kagome are looking for Shippo.
Then, a young demon girl named Mujina appears and asks Shippo if he is with "the half-demon."
InuYasha keeps trying to use the wind scar to find Shippo, but the Tetsusaiga's demonic energy keeps being absorbed by something.
Mujina is the one absorbing Tetsusaiga's demonic energy, with Shippo's help.
The wind scar is no longer working when InuYasha and Kagome meet up with Mujina and Shippo. InuYasha defeats Mujina, who turned out to be an old demon. Shippo was angry that Mujina used him. InuYasha punches Shippo for his stupidity. InuYasha destroys Mujina's sword she called "Dakki", and regained Tetsusaiga's power.
Meanwhile, Totosai tells Sesshomaru to strike a giant ogre demon with Tenseiga. Sesshomaru strikes the ogre, and a Meido or path to the underworld opened behind the demon. The demon was sucked into the Meido. Totosai explains that Tenseiga is a sword that connects these two worlds together, which is why it is able to revive dead humans. Totosai says the attack Sesshomaru performed is called the Meido Zangetsuha. Sesshomaru has a flashback to when Moryomaru said that Kagura died for nothing. Sesshomaru thinks that now he shall be the judge of that. Sesshomaru says he noe holds Tensega for battle. Rin then notices a soft wind is begginning to blow, Sesshomaru states to Rin and Jaken that it's time to go.
Now, you see a shot of the strange and magical sky. Then the episode ends.