The sword is the only power that can harm Aku. Jack's sword can only be used for good, but in the hands of evil, it cannot harm an innocent. This was proven when Aku managed to steal the sword from Jack and he could not use it to harm the Samurai, an innocent. This was something that Jack himself had forgotten. Very few characters other than Jack use the sword in the series, most notably the King of the Spartans in "Jack and the Spartans" after his own sword was broken and Jack threw him the sword to protect himself.
When Aku invaded the Emperor's domain, the gods Odin, Ra and Rama forged the katana from the power of righteousness extracted from the Emperor's spirit. Its divine nature was capable of inflicting burning wounds to Aku, which were very difficult for him to regenerate from. Enough strikes with the katana essentially negated Aku's ability to regenerate from his wounds, at which point further damage could severely weaken his powers or seal him inside the katana.
The katana could only be used for good; in the hands of evil, it could not harm an innocent. That was first demonstrated on one occasion where Aku took the katana and attempted to kill Jack with it. Instead of stabbing Jack, the katana simply struck Jack's chest without causing any harm at all (Episode XXX: Jack and the Zombies).
However, that property appeared to apply only to biological lifeforms and not to robots, as Jack, when he was infected by Aku's essence became Jack-Aku, either killed or grievously harmed an innocent robot with the katana, but appeared not to be able to kill the Lizard Monks, whom he struck with it and only rendered them unconscious (Episode XLIII: The Aku Infection).
Very few characters other than Jack used the katana in the series, most notably the King of the Spartans, after his own sword was broken and Jack threw him the katana to protect himself (Episode XXV: Jack and the Spartans). It was also revealed that The Emperor had used the katana to kill the bandits that threatened him and his family after they refused to leave them in peace (Episode XCIV).
At some point over the next 50 years, Aku began to actively destroy all of the world's time portals. After he foiled Jack's attempt to use the last of them and destroyed it, Aku mutated three innocent rams into monsters for Jack to fight. Overcome with rage and despair, Jack killed the mutated Rams, only to stare in horror when he saw what he had done. The sword fell from his hand, fell into the pit where the time portal had been, and was out of Jack's reach.
Years later, when Jack had regained his will thanks to his new friend and ally Ashi, he descended the pit with the help of a large bird. The katana was nowhere to be found, and Jack understood that he hadn't lost the sword; rather, the sword had left him. After he left the pit, Jack went to the cliff's edge and entered an astral plane by meditation. After a journey, Jack realized that his anger had consumed him, and vanquished the personification: Mad Jack. After Jack regained balance, the three gods restored him to his former self, full of confidence and hope, and returned the sword to him after they infused it with his own righteous spirit, which made the blade even more powerful (Episode XCVIII).
Aku confronted Jack, who learned from Scaramouche that he had lost the sword and the assassin was unaware that he had reclaimed it. Aku killed Scaramouche and made to leave upon realizing his mistake, but deduced Ashi's heritage, and turned her against Jack. Jack used his sword to defend himself, and after a slight cut to her corrupted form, Ashi begged Jack to kill her. Jack was unable to, and dropped the sword as he fell to his knees in defeat. Aku then seized the sword in triumph (Episode C).
The katana was kept a few distance away from the bound Jack and then shown to the world to commemorate Aku's triumph on its wielder. When Jack's allies assaulted Aku's lair, the freed Jack attempted to reclaim the katana, only for Ashi to stand in his way. Once Ashi succeeded in breaking free of Aku's control, while still retaining his powers, she stretched her arm out, grabbed the katana and handed it to Jack before she opened a time portal back to the past.
Upon returning to Aku's lair in the past, Jack struck furiously at Aku, and destroyed his mass with just a few strikes despite his attempt to flee. As the last remnant of Aku attempted to run away, Jack stabbed him from above and sealed him in the katana. With a final thrust to the platform, the remain of Aku spread throughout his lair before exploding, leaving only a crater and destroyed the threat of Aku forever (Episode CI).
After the destruction of Aku, the katana was presumably kept somewhere in his restored palace as it was when it first appeared.
The katana had the power to cut through any mundane substance, given that there was enough force behind it: Jack was, for instance, unable to cut through the Adamantium armor of the Ultra-Robots without artificial strength enhancement (Episode XVIII: Jack and the Ultra-robots). The katana was able to vanquish mystical beings that could not be slain by conventional means such as the Minions of Aku, The Sirens, and the evil spirit of the Well of King Ozric. Those beings were vaporized after they were slain with the katana.
Likewise, similar magically enhanced objects could also prove immune to being cut by the katana: The Scotsman's Sword was imbued with magic runes and proved to be too resilient for Jack to destroy (Episode XI: Jack and the Scotsman). The katana was incapable of harming and destroying beings of divine origin such as the Minions of Set (Episode XXXI: Jack in Egypt). The katana was also incapable of destroying the magical orb that imprisoned The Fairy (Episode XV: Jack Tales).
The katana itself, possibly due to its divine origin, seemed to be essentially impervious to harm; it simply rebounded off of substances that it could not harm instead of shattering upon impact, and could be used to block or deflect virtually anything without suffering damage. Unlike more mundane katanas, which required extensive maintenance, Jack's katana appeared not to require any sort of upkeep, though Jack was shown to sharpen it on one occasion.
After Jack had passed his test, the gods made it more powerful than before by infusing the purity and strength of Jack's own spirit. This can be seen when Jack managed to destroy a huge portion of Aku in just a few strikes and severely reduced his regeneration and shape-shifting abilities, allowing Jack to destroy him for good.
The katana's main purpose was to destroy Aku and defend the innocent; however, one very important aspect that Jack had failed to consider in his first battle with Aku, was that the sword was still just a tool, whose true power depended on its wielder (Episode I: The Beginning). Likewise, its wielder must be pure in heart, or else they would be unable to use it, as shown when it abandoned Jack when he gave in to his anger.
- The origin of the katana is similar to Mjölnir, the hammer of Thor in Marvel Universe; both were created with rare magic, possess immense power and take the form of the wielders cultural weapon. Odin was even involved in the creation of both, though two separate versions.
- Both weapons can only be wielded by someone worthy and their owners, Thor and Jack have to pass their tests to prove their worthiness to wield them again.