Kikyo was killed 50 years ago by Naraku. At the time of her death herself and Inu Yasha had been speaking about using the Shikkon No Tama, which she had been entrusted with, to change him from half demon to all human. Naraku shows up and fools both of them into thinking that the other tried to kill them, resulting in Kikyo using her last bit of strength to pin Inu Yasha to a tree. It holds him there until Kagome breaks the spell binding him to the tree. But Kikyo's soul is not at rest, and Inu Yasha will see her again.
Kikyo wanders the earth helping towns by aiding their sick, and elderly. She has no heart, but it often seems like she does. Kikyo still has feelings for Inu Yasha, and is very envious of Kagome. Kikyo still has her priestly powers, even though she's died, and can hold her own against reckless demons.