Demon of the Shikon no Tama

is the true overarching antagonist of the entire series, having always manipulated Naraku, who was nothing more than an instrument to ensure his continued existence.

He is an incredibly powerful dragon yōkai residing in the Shikon no Tama, and from his spirit was born the evil called Magatsuhi, who is only his offshoot and then he is the latter's true identity inside the Jewel.

Origins
He was the unnamed and monstrous dragon demon who fought and died with the ancient priestess Midoriko hundreds of years before the events of the series, during the, a time when the nobility were still in control of Japan. There were piles of people who had died in war and hunger. As the corpses and exhausted humans were eaten, in no time, the numbers of yōkai increased. All sort of buddhist priests and generals exterminated the yōkai it appears.

In the manga, but not in the anime, he was created when many minor yōkai (dragons, ground-spiders, oni, and so on) possessed a mortal man who secretly loved Midoriko and formed into one demon in order to kill her, similar to how Onigumo loved Kikyō and made a pact with various demons (including a Small Spider Demon in the anime) which created Naraku.

However, unlike to Naraku, he was not an hanyō but a full demon completely devoid of human feelings. Indeed, while Onigumo's body was completely devoured and his evil spirit used as the yōkai's adhesive for their new body as a composite of all their spirits, the human who loved Midoriko was killed and only his lifeless corpse was incorporated on the base of the dragon's neck with only the head and right hand of his body visible, but of course not inside the jewel since there are only the yōkai's spirits. The battle lasted for seven days and nights and eventually he captured Midoriko in his jaws. Midoriko, in one final attempt to defeat him, pulled his spirit into her body, fusing it with her own spirit, and then expelled them both simultaneously along with her heart.

Both the demon and Midoriko died, but their spirits combined to give birth to the Shikon no Tama. Midoriko and he remained imprisoned within the jewel and continued their battle.

However, as seen in the final scene, as opposed to his great enemy, who, being the light of the jewel, can move freely even in the evil part, he can't do the same in the good part, since he would be purified instantly as not longer protected by the darkness.

During the story
He was first seen in the mummified corpse of an unnamed but massive demon in Midoriko's cave. The spirits of the demons that formed him appear from the Shikon Jewel when a fragment of it gets near his stone body, attempting to escape and revive. Kirara transformed to fight them, but he was wrapped by his tail around Kirara and attempted to kill her before Inuyasha fought him off. He remained inside the jewel for the time being.

Final battle
During the final battle, after the spirits of Magatsuhi and Naraku were respectively destroyed forever from the material world by Sesshōmaru and Kagome with Inuyasha's help, he was still connected to the Sacred Jewel, and his spirit was still in combat with Midoriko inside the jewel, like how Naraku was in control of the demons that made up his body.

Inuyasha inadvertently dived into the Jewel and encountered the giant dragon-like demon. Inuyasha sliced him immediately with the Wind Scar, and he was split into the many minor demons that formed him, because he is protected by the evil of the jewel.

The demons informed Inuyasha that he didn't need to keep searching for Kagome as she would be imprisoned inside the Jewel also soon enough. They also state that if Kagome were to make a single selfish wish upon the Shikon Jewel, she would replace Midoriko as the spirit trapped inside of the jewel stuck in eternal combat with the evil presence as Naraku switches places with them, so they can revive in the material world. In the manga, although it is not directly explained, his wish made by Naraku dissolved forever Midoriko's spirit in order to prepare the new place for Kagome.

Inuyasha refused to believe him, and proceeded to attack the demons that formed him in an attempt to reach Kagome in the Meidō outside the jewel and save her. After Midoriko's final death in the manga, then as soon as the light dies, Inuyasha became her true successor in the ancient fight against the demon.

In the manga, although it is not directly explained, he was destroyed forever by Inuyasha when he cut the point of light in the darkness inside the Shikon Jewel with Meidō Zangetsuha, which was very clearly the key to destroy the jewel's evil. Indeed, with Inuyasha's attack at this very point, the purity of the Jewel called Naohi annihilated the evil corrupting presence within forever, until the shimmering light that emanated from it and the voice projecting out of the jewel ended completely.

Instead, in the anime version, when Kagome made the right wish, the demons that form him were enveloped in light.

Personality
He views every other single being, living or not, as inferior to him.

Physical description
He is an amalgamation of many minor demons (dragons, ground-spiders, oni, and so on) forming an oriental sort of dragon.

Powers & abilities

 * Immortality: As being the demon spirit residing within the Shikon Jewel, he is virtually immune to all forms of physical damage. This only sent him back into the evil of the jewel.
 * High-Speed Regeneration: Protected by the evil of the jewel, he is able to regenerate within a matter of seconds, or become the several demons that he used to be, as demonstrated when Inuyasha attacks him with the Wind Scar in the final battle. However, being easily destroyed with a Tessaiga's single attack, if he had been still alive in the material world, he would be instantly killed by Inuyasha.

Relationships
Naraku himself never found happiness and wanted Kikyō's love. The demon had promised to satisfy his desire once the jewel had been completed, but in reality he did nothing but manipulate him throughout the history, creating an instrument to ensure his continued existence. In fact, once the jewel has been completed, he has not satisfied this desire.
 * Naraku

Trivia

 * If the Jewel of Four Souls is tainted by being held by an evil/greedy human or yōkai it turns a lurid black-violet, represented by Magatsuhi/Evil within the jewel, which means the powerful yōkai is winning over Midoriko and Naohi/Good.
 * Interestingly a mask-like face, similar to Ryūkotsusei's face and Gōra's face, can be seen underneath the dragon's jaw in episode 25 of The Final Act, despite its human component being unmentioned in the anime.

Media appearances
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Manga

 * Chapter 89
 * Chapter 94
 * Chapter 375
 * Chapter 376
 * Chapter 377
 * Chapter 380
 * Chapter 555
 * Chapter 556
 * Chapter 557

Anime
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 * Episode 26
 * Episode 94
 * Episode 147
 * Episode 169
 * Episode 192
 * Episode 193