Since his father was a demon and his mother was human, he's a hanyou.

He was picked on demons and villagers he lived with, and was feared by humans. He tries to hide his emotions when he's in this form, trying to make himself tough, but he still has a sensitive side. Especialy for Kagome, when other males come around.

 

Every new moon, which is once a month, Inuyasha loses all of his demonic powers and turns human for the night. He tries to keep this secret to himself because if any of his enemies knew this, he would be in danger. By dawn, he gets his powers back and returns to his normal hanyou self. He's also nicer to Kagome in his human form.

 

When Inuyasha get's seperated from his sword, there's nothing to protect him against the demonic blood within him. Suddenly he get's a desire to stay a live, and transforms into a demon. There's a flaw in his though. Since he's a hanyou, his youkai blood can ony take so much. So, he would keep fighting until the demon inside of him kills him. And Kagome's the only one who can stop him and calm him down, turning him back to his hanyou self again. See the 2nd movie.