Inuyasha is a half-demon, the son of the great dog demon known as the Inu no Taisho and a human woman named Izayoi. This dual heritage places him in a unique and often difficult position, as he is rejected by both full demons for his human blood and by humans for his demonic nature. For much of his life, this isolation led him to seek power above all else, with the goal of using the Shikon Jewel to transform himself into a full-fledged demon.

Before the events of The Final Act, Inuyasha was sealed to a sacred tree for fifty years by the priestess Kikyo, a woman he had grown to trust and love. After being released from his seal by Kikyo's reincarnation, Kagome Higurashi, he begins traveling with her to collect the shards of the shattered Shikon Jewel. By the time of The Final Act, Inuyasha has formed a tight-knit group of companions, including the monk Miroku, the demon slayer Sango, and the young fox demon Shippo.

In The Final Act, Inuyasha is driven by the ultimate goal of defeating his most persistent and vengeful enemy, the half-demon Naraku. This quest is not only for the sake of gathering the Shikon Jewel shards but also for revenge, as Naraku is responsible for tricking him and Kikyo fifty years prior, leading to their tragic downfall. His primary motivation is to protect his friends and put an end to Naraku's machinations once and for all.

Inuyasha's personality remains characteristically brash, hot-headed, and impatient throughout The Final Act. He is quick to anger and often acts on impulse, which leads him into unnecessary fights, particularly with Koga, the wolf-demon prince who also vies for Kagome's attention. Despite his rough exterior and frequent insistence that he is acting only out of self-interest, Inuyasha possesses a deeply compassionate and loyal heart. He consistently puts himself in harm's way to protect his companions, especially Kagome. His pride is a core part of his identity; he hates showing weakness and refuses to ask for help, preferring to prove his strength as a warrior.

A central aspect of his character development in The Final Act involves his maturation regarding his relationships. He must finally come to terms with his lingering feelings for the now-deceased Kikyo and his growing, deeper love for Kagome. His jealousy and inability to navigate these emotions cause significant turmoil, but he ultimately learns to trust in the bond he has forged with Kagome. His relationship with his older half-brother, Sesshomaru, also evolves from one of pure hatred and rivalry to a grudging respect, as they both find common ground in their pursuit of power to defeat Naraku.

Inuyasha's role in the story is that of the primary physical fighter and the group's powerhouse. He is often the one who confronts Naraku and his most powerful incarnations directly. Throughout the season, he undergoes significant power development, learning to master new techniques with his heirloom sword, the Tessaiga. While he begins the season having mastered the Wind Scar and Adamant Barrage techniques, The Final Act sees him acquire the power of the Dragon-Scaled Tessaiga, which allows him to absorb demonic energy. His most significant achievement, however, is mastering the Meido Zangetsuha, a forbidden technique that opens a portal to the underworld, which he ultimately must learn to wield to rival Sesshomaru and defeat Naraku's final forms. As a half-demon, he also has the ability to transform into a full demon when his life is in extreme danger or when witnessing the full moon, though this form is initially uncontrollable and dangerous to his allies.