Tsubaki was a powerful priestess who rivaled even Kikyo in power, and was well-respected before her turn towards darkness. One day, Tsubaki cursed Kikyo, saying that she must abandon human feelings to retain her power, and that if she falls in love with a man she would die a horrible death. Kikyo knew she was cursed, but wasn't concerned, and scoffed at the idea of love. Tsubaki wished for the Sacred Jewel to retain her youth for fear of fading beauty, which is why the jewel was entrusted to Kikyo.
Soon after, Kikyo began to fall for Inuyasha, and Tsubaki desired the jewel for her wish to be granted, so she arranged to curse and kill her rival using her familiar, a Shikigami. Unfortunately for her, Kikyo fired the curse back upon its caster, giving her a scar on her right eye making Tsubaki vow revenge on her rival. As it turned out, the dark priestess was correct, and Kikyo died a violent death at the hands of (inadvertently) Naraku. Even 50 years later, Tsubaki's hatred for her held, and Naraku used this to his advantage. He asked for her services in turning Kagome on Inuyasha and kill him vicariously through her. Kagura was also surprised when the dark priestess revealed that despite her biological age, she could regress to her former youth.
Tsubaki succeeded in cursing Kagome through tainted shards of the Shikon Jewel, and maintained control over her body, although not over her mind, leaving her with enough strength to tell Inuyasha to flee. He refuses, however, and Kikyo later confronts the dark priestess. Tsubaki notices that she literally has not aged in the 50 years since her passing, and Kikyo acknowledges Kagome's power, saying that if she did manage to kill Inuyasha she would avenge him. Kagome snaps out of her trance and she and her group track Tsubaki down, engaging in a battle with her. Kagome ends the battle by firing the priestess' Shikigami back at her, thus breaking the curse that was placed upon her. Tsubaki disappears in the manga after this instance.
The anime shows what happened to Tsubaki after she fled the battle. She began to hate Naraku when she realized that she was just another one of his tools, and took the Shikon Jewel for herself, fleeing to the shrine where she once trained. She tricks two of the initiates standing guard, Momiji and Botan, into assisting her with eliminating Inuyasha and Kagome. Meanwhile, while Momiji and Botan deal with Inuyasha's group, the priestess planned to awaken a sealed demon and obtain its power via her cursed eye. As Inuyasha desperately tries to convince the initiates that Tsubaki is the evil one, Kagura stops by to retrieve the jewel, but the priestess refuses to part with it.
She succeeds in absorbing the sealed demon's powers, and turns into a massive half-demon. Inuyasha deals a fatal blow with his Backlash Wave. The sacred jewel is returned to Naraku as Tsubaki ages and fades away, regretting underestimating Inuyasha and Kagome's power.
Tsubaki was shown to have a very biased personality, hating Kagome purely for being Kikyo's reincarnation, despite her saying that she was Kagome and no-one else. She was exceedingly sadistic, placing a curse on Kagome that caused an extremely slow and painful death while delighting in every moment of her suffering. She was also incredibly smug and arrogant, being amused by Kagome missing her arrows (in spite of the curse getting in the way) and gloating that she was just 'an imitation Kikyo', despite Naraku's warning not to underestimate her. Her arrogance was further shown by her firm belief that there was nothing the group could do to stop Kagome dying, which was proven completely wrong when she deflected Tsubaki's shikigami right back at her, just like Kikyo had done 50 years before. This caused her pride to shatter completely, replaced with great shock and embarrassment over being beaten the same way twice.
Powers & Abilities
Curse - enables Tsubaki to take full control over a person's body and possibly kill them from afar