Kaede is the younger sister of priestess Kikyo. Orphaned young, Kikyo became her only family. Kaede assisted Kikyo with tasks such as gathering herbs and holding arrows during their priestess training. A demon attack on their village saw Kaede attempt to shoot a demon threatening Kikyo, but she missed. The demon attacked Kaede; though Kikyo shot it with an arrow, the resulting explosion permanently blinded Kaede in her right eye. In the manga, this injury happened shortly before Kikyo's death, Kaede's eye still bandaged and bleeding during Inuyasha's subsequent attack. The anime depicts debris from Kikyo's arrow piercing Kaede's eye.
Following Kikyo's death, Kaede became the village priestess, defending against demons. She recognized Kagome Higurashi as Kikyo's reincarnation upon her arrival from the modern era. After Kagome freed Inuyasha, Kaede placed the "Beads of Subjugation" on him, enabling Kagome to control him with the command "Sit".
Kaede recounted key events of Kikyo's past, including her initial encounters with Inuyasha and the circumstances surrounding the Shikon Jewel. Having witnessed Kikyo receive the Jewel from demon slayers, Kaede saw the subsequent demon attacks that prevented Kikyo from enjoying ordinary life. She observed Kikyo's internal conflict, such as enchanting beads intended to subjugate Inuyasha but ultimately choosing not to use them. Kaede also noted subtle changes in Kikyo's behavior, like paying more attention to her appearance after meeting Inuyasha, including applying rouge he gifted her.
Later, Kaede helped identify Naraku's original human identity, Onigumo, when he resurfaced as Muso. During Kikyo's final death, Kaede witnessed soul collectors and received a spiritual farewell from Kikyo, who apologized for the suffering caused.
After Naraku's defeat and the Shikon Jewel's destruction, Kaede took in Rin, helping her adjust to human village life. She also trained Kagome to develop her spiritual powers into a full priestess, aiming to make her stronger than Kikyo. In the sequel era, Kaede continued Kagome's training intermittently. She witnessed Sesshomaru return for his newborn twin daughters, Towa and Setsuna, due to threats from Kirinmaru and Zero. When the ten-year-old Setsuna briefly lived in the village, Kaede later explained Setsuna's heritage to Hisui after Setsuna traveled to Tokyo. Kaede recognized Moroha as Inuyasha and Kagome's daughter upon meeting her.
During demon attacks targeting Kirinmaru's "Degenerate Age" plan, Kaede helped evacuate villagers at Kagome's request. Despite describing her powers as "very limited," she demonstrated capability by firing multiple sacred arrows to exterminate demon hordes. Kaede lived into her eighties, a rarity for the era, expressing that prolonged exposure to death during the Sengoku period led her to accept life events with less emotional turmoil, though she still cared for those needing help. She expressed dismay when the young Setsuna nearly killed fleeing bandits, concerned about such violence at her age.