Hanyū originated as the ancient entity Hai-Ryūn Ieasomūru Jeda, a goddess from a non-human clan that migrated to the region later known as Hinamizawa. Her clan pursued coexistence with humans but encountered discrimination due to their horns. She married Furude Riku, heir to the Furude Shrine, and bore a daughter, Furude Ōka. This union introduced non-human blood into the human populace, sparking paranoia and triggering Hinamizawa Syndrome—a condition inducing hallucinations and violence in advanced stages. To quell escalating conflict, Hanyū volunteered to bear the villagers' sins and was sacrificed by Ōka using the Onigari-no-ryuuou sword during the first Watanagashi Festival. The act cracked her horn and caused her death.

Post-sacrifice, she became revered as the deity Oyashiro-sama, with villagers unaware they had killed their own goddess. Hanyū then existed incorporeally for centuries, unable to interact with humans until the birth of her descendant, Rika Furude, the eighth-generation Furude heir. Rika could perceive and communicate with Hanyū, who acted as a maternal figure, teaching her skills like cooking. Their senses became intrinsically linked, sharing physical experiences such as pain or taste. Hanyū gained the ability to traverse the Sea of Fragments, enabling time loops where Rika could relive periods preceding her repeated deaths in Hinamizawa's cyclical tragedies. Over time, Hanyū's powers waned, limiting resets to only two weeks prior to Rika's death. Her cracked horn also caused Rika to retain fragmented memories between loops. Spiritually following villagers afflicted with Hinamizawa Syndrome, Hanyū apologized for her perceived helplessness, inadvertently exacerbating their paranoia—manifesting as mysterious footsteps or voices.

Throughout the looping cycles, Hanyū remained Rika's constant, invisible companion. She exhibited a timid, pessimistic demeanor, frequently muttering "au, au" when nervous or distressed, and discouraged Rika from excessive optimism to shield her from repeated disappointments. Despite her gentle nature, she displayed sternness as Oyashiro-sama, intimidating adversaries like the Mountain Dogs or confronting antagonists like Miyo Takano with a resonant "demonic voice." Hanyū occasionally utilized abilities such as teleportation, time-stopping, and mind control, though her influence was limited. Rena Ryūgū, sensitive to spiritual phenomena due to Hinamizawa Syndrome encounters, occasionally sensed Hanyū's presence, hinting at a deeper connection where Hanyū may have intervened in Rena's past struggles.

Later developments clarified Hanyū's origins through her relationship with Eua, a higher-dimensional entity who identified Hanyū as her "failure" and a "part of [herself]." Audio commentaries revealed Hanyū emerged as a "small Eua" after Eua's horn was damaged. During the events of "SOTSU," Hanyū reclaimed the discarded Onigari-no-ryuuou and harnessed Fragments to augment her powers, defeating Eua and damaging her horn. This act underscored her latent capabilities despite her typically passive role. Hanyū's bond with Rika evolved across fragments; she endured Rika's occasional rudeness and expressed willingness to endure endless loops for their companionship, viewing Rika as a reincarnation of Ōka. Her character arc culminated in actively supporting Rika's fight for a peaceful future, moving beyond her earlier resignation to fate.