Kumatetsu is a potential successor to the throne of the Beast Kingdom. He has to choose someone to be his apprentice and he ends up choosing a human boy named Ren (and later names him Kyuuta).

Near the end of the movie, Kumatetsu battles Iozen to see who will become the new lord. Kumatetsu wins but is badly injured right after his victory. Later on, Kyuuta ends up getting in big danger. Since Kumatetsu couldn't help due to him being injured, he decides to reincarnate as a sword and he becomes a part of Kyuuta's soul.

Source: MAL