A hanyō is a mixture of a human and a yōkai, either by birth or by unnatural means. There are two ways that a hanyō is born. One can be born of a yōkai and a human. The other way is when a human with an unfulfilled desire merges with many demons; Naraku was born in this fashion.
Many hanyō by birth show physical signs of their yōkai roots, though they usually have a primarily human appearance.
Due to this mixed nature, hanyō are often considered outcasts to both human and yōkai societies. The only people of either races that are even capable of accepting or tolerating hanyō are close family members and/or friends most of the time, who are ostracized themselves for choosing to being close to a hanyō.
While a hanyō can never be as strong as the demonic parent without becoming a full yōkai, most hanyō seem to be powerful enough to not only deal with any human hostilities, but also to easily dispatch most yōkai if their will and aggression is very strong. It seems as if the only demons that have hanyō spawn are the Yōkai powerful enough that even diluting their power with human blood would still leave their children better off than the majority of demons. Inuyasha is the prime example of this, born of the Inu no Taishō, a very powerful daiyōkai.
Half-demons have a big weakness. Once a month, they lose, for one day or one night, their demonic powers, and are no different from pure humans. In an episode, Kōga once said that most half-demons hide the time of their weakness because of fear. However, vice versa, a hanyō can also become a pure demon and must endure big pains and tortures, or their life is in danger. In this case, they are also as strong as the yōkai from which they are descended from.
Inuyasha is the only hanyō which one sees in this form, and he is, as a yōkai, wild and cruel and kills random humans. Because one does not see other half-demons in the series in this form, it is unclear whether they also lose their human minds during their transformations and become lascivious for murder. Indeed, one can assume from the fact that it is so.
A half-demon does not always possess the self-healing factor of a demon. Inuyasha is aged more than 200 years, only slowly, and can recover within mere hours or days from heavy injuries, even growing a new fang in half a day. However, Jinenji seems to grow old at human speed, and recovers from injuries at human speed.
Jinenji's mother once said that there is for every pretty half-demon also one which is not it. However, really Jinenji is the only hanyō which looks "monstrous" in the series.
Natural-born half-demons are to be recognised almost always as those. However, hanyō which originated in the same way like Naraku can apparently look like pure humans, and are recognised - at least optically - not as this what they are in true.