At first glance when not in use, the Tessaiga appeared to be nothing more than a battered katana with a heavily chipped and rusted blade with the hilt's fabric tearing away. When transformed, the blade turned into an over-sized dog's fang, fitting for its name. The cross guard turned into a large patch of fur similar to a dog's also. In the later chapters and episodes, the blade not only became slightly larger, but changed colors and transformed according to the abilities it absorbed. When Tessaiga is let go of, such as being thrown towards an enemy, it can retain its true form for a few seconds before reverting to its normal form.
- Anti-Yōkai Barrier: The Inu no Taishō placed a barrier within the Tessaiga that would burn pure yōkai that attempt to touch it. After the Inu no Taishō's death, Tōtōsai (being the sword's creator) is the only living yōkai that could both hold and activate the Tessaiga without harm; oddly the same would go with Shippō, who is also a pure yōkai, so it may be possible that the barrier does not affect any yōkai that shows kindness for humans or that comes with little to no malicious intent. Humans were capable of holding the Tessaiga in its untransformed katana state, with the sword's barrier protecting them from harm. Due to their hybrid nature, hanyō such as Inuyasha could both hold the Tessaiga and activate its true form if they showed compassion for humans. For unexplained reasons, when Sesshomarū grabbed Tessaiga with a human hand and on multiple occasions with his right hand, despite being rejected by the barrier, Tessaiga still transformed. Suggesting Tessaiga can be forced to transform if a strong enough yōkai were to touch it. Which would explain the need for a barrier if Tessaiga was capable of remaining untransformed for those it seemed unworthy. Although its katana form isn't very useful for attacks, it does have very strong durability, having withstood a clash with Tōkijin, with easily cut apart Hiraikōtsu, another weapon forged from a demon's body parts.
- Tessaiga's Scabbard: Being composed of the wood of Bokusenō, the Tessaiga's scabbard could deflect or resist yōki-based attacks; however, if that force was used continuously the scabbard would crack and its barrier would fail. It could also summon the Tessaiga, as seen when Inuyasha was trapped inside the flask of a sage. If the scabbard was broken, it could be repaired by leaving it beside a hive of yōkai bees, who would use their beeswax to repair it.
- Kenatsu: (剣圧, "Sword Pressure") Like many yōkai swords, Tessaiga could cut opponents without touching them by firing small concentrated bursts of yōki.
- Kaze no Kizu (風の傷, "Scar of the Wind; "Wind Scar" in the English dub"): The Tessaiga's full-powered kenatsu and signature attack that could, according to legend, slay one hundred yōkai in a single strike. It was activated by sensing the fissure (or "scar") between the clashing yōki of the Tessaiga's wielder and his yōkai opponent and swinging the sword into the fissure. Inuyasha took some time to master this technique, and didn't even know of its strength at first, until Sesshōmaru showed it to him. After his battle with Ryūkotsusei, Inuyasha learned to put his own power into the attack so the scar appeared around Tessaiga's blade and could be triggered instantaneously. Until Inuyasha gained that ability, the Kaze no Kizu was not very useful against Kagura since she can change the yōki winds so they didn't clash and create the scar.
- Bakuryūha (爆流破, "Explosive-Style Destruction; "Backlash Wave" in the English dub"): The Tessaiga's ougi (lit. "ultimate technique"). It used the opponent's yōki and unleashed the Kaze no Kizu at the right point, the yōkai's energy would be reflected back with the added power of the Kaze no Kizu. Inuyasha first used the technique to defeat Ryūkotsusei by reflecting his yōki blasts back at him. However, two requirements were needed in order to implement the Bakuryūha. The first was that Inuyasha could only reflect pure energy attacks composed of yōki. The second was that his own yōki had to be at a similar level of his opponent's or the Bakuryūha would not form.
- Power Assimilation: Perhaps the Tessaiga's most useful ability is its ability to absorb the primary ability of any yōkai or yōkai-based artifact that is destroyed by its blade and convert said ability into Tessaiga's nature as a sword that cuts.
- Indestructibility: During the battle to destroy the demon sword Dakki it is revealed by Inuyasha that, though Tessaiga can be badly damaged, the blade cannot break so long as he himself is alive. Tessaiga apparently gained this ability after being reforged with Inuyasha's own fang, as the original blade had been bitten in half by Goshinki.