The Demon (played by actor Fredric Lehne) has several children of his own, notably his daughter, the demon who possessed Meg Masters, an antagonist in the first season who was exorcised and sent back to hell by Dean Winchester. The only thing he seems to fear is The Colt, an enchanted gun which can kill anything. He spent the first season trying to obtain this weapon. At the beginning of the second season, he procured it from John Winchester, along with John's life, in exchange for saving the life of John's son, Dean.
Sam and Dean thought, for a time, the Demon's attacks followed a set pattern. The attack would occur on the "gifted" child's six-month birthday, would originate in the child's nursery, and the mother of the child would die by being pinned to the ceiling, where they would burst into flames. This was the case with Sam and his mother Mary Winchester, and with Max Miller and his mother. However, the pattern is broken when Sam's girlfriend Jessica is killed, and in "Simon Said" with the case of Andy Gallagher and his twin brother Ansem Weems, who were both adopted. Andy's adoptive mother was killed on his six-month birthday, but Ansem's was not.
The full scope of his powers is unknown. He mostly appears by possessing the bodies of others, and is only identifiable when he presents yellow eyes. He seems to possess telekinetic and pyrokinetic powers which he uses elaborately to kill his primary victims. When not in possession of a body, he can exist as a black smoke, and dodged a bullet from Sam by teleporting. He holds considerable influence and power, possessing a reaper and saving Dean's life. Unlike other demons on the show, he appears to be immune to exorcisms, holy water, and most other forms of defense against demons. It is notable that in "In My Time of Dying" He refers to John making a deal with him as "Making deals with Devils" and how it isn't very appropriate.
In "All Hell Breaks Loose, Part 1" The Demon appears to Sam in a dream. In this twisted dream, the Demon informs Sam that he is in a contest against all the other "special children" like him. The Demon then notes that Sam is his favorite, so he shows Sam a vision of the night that the Demon visits him. It is shown that the Demon sort of "baptizes" the special children with his own blood, as sort of a ritual. The Demon also shows that Sam's mother, Mary, recognizes him and was only killed because she was at the "wrong place at the wrong time."
The Demon's latest appearance is in "All Hell Breaks Loose, Part 2", where he approaches Jake in a dream to tell him what to do now that he is the last survivor. He threatens Jake's family, and the soldier listens. When Jake is asked by the Demon to do something for him, Jake is given the Coltthe Colt pointed at him and says that Jake would rather have health and wealth than to shoot the Demon. He promises security for his family as well, causing Jake to lower the Colt. With the Demon's pro and he immediately points it at the Demon. Feigning fear, the Demon shrugs off mises, Jake is coerced into entering the Devil's Trap and into using the Colt as a key to open a gate of hell. The rush of demons from the gate opens the Devil's Trap so that the Demon can enter. When the iron lines are broken, he appears behind Dean and is about to be shot with the Colt, but telekinetically grabs it and forcefully throws Dean onto the ground, telling him how thankful he is to Dean that he revived Sam since he liked him better than Jake. He also informs Dean that whatever Dean brought back is probably not "100% Sam" and taunts Dean that Sam coldheartedly shot Jake multiple times, a feat which he could not accomplish before. He then aims the Colt at Dean preparing to kill him, but John appears and grabs him from behind pulling him out of his human host. The Demon escapes from John's grasp and returns to his body, but Dean already has the Colt and shoots him in the heart, killing him. Dean then triumphantly stands over the Demon's "body", recognizing he and Sam's victory over the thing which has given their family so much death and heartache. However, with the release of hundreds of demons, the Winchester brothers accept the fact that they have more work to do and more demons to hunt down and kill, possibly worse than the Yellow Eyed Demon.
There is a further mention of The Demon in Season Three's episode four, Sin City, in which a demon affirms that The Demon's real name is Azazel.
The Yellow-Eyed Demon chose a group of Special Children to take part in war against humanity. I have plans Sammy, plans for you and all the children like you… Yellow-Eyed Demon (Devil's Trap) Special Children:
The name Azazel first appears in the Hebrew Bible (Leviticus 16:8) - its meaning can mean "God strengthens", but also "impudent to God". In the Book of Enoch, Azazel was described as one of the Grigori, a fallen angel, who married human women. In Modern Hebrew, '"lekh l'Azazel" (לך לעזאזל) is the equivalent of the English curse "go to Hell".' He is said to be the prinicpal standard-bearer of the infernal armies, and ranks quite high in the ranks of Hell's Hierarchy.
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