Daikatana has a intricate time traveling storyline. The story line starts at the 16th century then goes to 2455. The storyline presented below includes everything that is canon, and omits non-canon/conflicting information.
16th Century Edit
In an undisclosed time in the 16th century, in Feudal Japan, Usagi Miyamoto is born and raised by his father, sword smith and weapons forger, Inshiro Miyamoto. The Ebiharas and Miyamotos are engaged in clan wars, and the Miyamotos oppressive regime is crumbling. Osaka Mishima hires Usagi Miyamoto to create the ultimate weapon for him, the Daikatana. After seeing the Mishima's evil plan, Usagi bestows the power of the Daikatana on Inshiro Ebihara, who fights the Mishima clan and overthrows them. Usagi then throws the Daikatana into the volcano, Mount Fujiya.