When the Demon Sorcerers were banished by the Eight Immortals, traces of the demons' chi was left in the items used by the Immortals. So when the "bad chi" stars aligned, the items used by the Eight Immortals activated, and someone would become imbued with the power of the respective demon sealed away.
When demon chi is absorbed, the host slowly transforms into the demon itself but leaving minor changes, this is explained when Jade absorbed the wind chi.
Drago, the son of Shendu, broke out of Section 13 to find the Immortal items and absorb the powers of his demon aunts and uncles. After breaking free, Drago recruited Ratso, Finn, and Chow for the first item, the fan of Zhongli Quan, by giving a portion of his own fire chi. Although, they were defeated so easily Drago reabsorbed his chi and fired them.
In the rest of the series, he recruited the Ice Crew, giving another portion of his demon chi to them.
In the finale, Drago manages to absorb all seven demon chi, thus making them irremovable. He gives his henchmen another 'taste' of demon chi, wind, earth and thunder.
- While those who absorb a demon's chi will usually only take on the demon's physiological characteristics, Drago also gained Tso Lan's clothing when he absorbed his chi.
- Humans who absorb a demon's chi may lose some of their humanity as a result, but this depends largely on the demon. Tohru appears to lose all control after becoming the Mountain Demon, but appears to retain his protectiveness towards Jade. Similarly, Miss Hartman still recognizes her role as a teacher and uses her Sky Demon powers to protect Jade, despite becoming more animalistic in nature. Larry also loses himself as the Earth Demon in his desire to become a superhero, but was eventually convinced to give up his powers. All the humans that possessed some aspect of the Fire Demon Chi as well as Jade with the Wind Demon Chi did not show any changes in mindset.