Shan Yu is first seen using the sword to menace an Imperial scout. After climbing a tree for a lay of the land, he uses his sword to cut the top of the tree for a better view, before his falcon, Hayabusa, presents him with a doll from a village in the mountains.
During the battle in the mountains, after Mulan (disguised as a male soldier under the alias "Ping") starts an avalanche, Shan Yu slashes her with his sword, which later causes her identity to be revealed. Upon arriving at the Imperial City to celebrate, Captain Li Shang presents the sword to the Emperor of China. However, Hayabusa suddenly snatches the sword away and returns it to its owner, who is perched on the rooftop of the Emperor's Palace. During the battle in the palace, Mulan uses the sword to cut the lantern line Chien-Po used to rescue the Emperor, preventing Shan Yu from following. Shan Yu recovers the sword and uses it to threaten Li Shang for robbing him of his victory, but Mulan reveals that it was she who did so. While chasing Mulan through one of the hallways in the palace, he uses the sword to slice through three support pillars with ease, one of which breaks through the wall, allowing Mulan to climb up to the roof. After Shan Yu corners Mulan on the palace rooftop, Mulan manages to disarm him with her fan and pin him to the roof with his own weapon, buying Mushu time to kill him with a large firework.
After Shan Yu is finally terminated, the Emperor hands the sword of Shan Yu to Mulan to show the world what she has done for China. Upon returning home, she presents it to her father as a gift to honor the family.
The sword is part of the Wicked Nine, a group of nine objects used by Disney Villains as revealed in "The Mystic Isles: The Falcon's Eye". It holds the Falcon's Eye, a magical jewel hidden within its hilt. It had wound up in a marketplace in the kingdom of Wei-Ling.