The lineage of the Yagyu Shinkage Ryu can be traced in brief from Kamiizumi Nobutsuna (1508-1578), student of the Kage Ryu and founder of the Shinkage Ryu, to Yagyu Sekishusai Muneyoshi (1527-1606), founder of the Yagyu Shinkage Ryu, to his successor Yagyu Tajima No Kami Munenori (1571-1646).

Nobutsuna was an expert swordsman traveling Japan with his students, working on his skill. When he reached the area of the Kinki region, one of the finest swordsmen of the area requested a lesson with him. This swordsman was Muneyoshi, head of the Yagyu clan. During his lesson with one of Nobutsuna's students, Muneyoshi was easily beaten, and so amazed by the skill of the Shinkage Ryu student that he immediately asked that Nobutsuna teach him. For two years, Nobutsuna taught Muneyoshi in the Shinkage Ryu before awarding him the hiden, or secret teachings. In effect, this made him the successor to the Shinkage Ryu.

After inheriting the ryu, Muneyoshi created the Yagyu Shinkage Ryu and continued his development of empty hand against the sword (muto). His skill in this was so famous that it caught the eye of Tokugawa Ieyasu, then a daimyo under Shogun Toyotomi Hideyoshi. After a demonstration by Muneyoshi, Ieyasu picked up a wooden sword to test Muneyoshi himself and was quickly beaten. Ieyasu was so impressed with Muneyoshi's skill that he requested that he become his sword instructor. Muneyoshi, being advanced in years, declined but suggested his son, the successor of the ryu in his place.

It is unusual for the youngest son to inherit a ryu, however Munenori's eldest brother, Yoshikatsu, had been terribly wounded in battle in 1571, therefore both he and Munenori inherited the school. These two schools continue today as the Owari and Edo branches of the Yagyu Shinkage Ryu. The Edo branch became the sword system of the main Tokugawa shogunate, in Edo (present-day Tokyo). Yoshikatsu became advisor to the Tokugawa representatives in Nagoya, where he founded the Owari Yagyu Shinkage Ryu.

Yagyu Tajima No Kami Munenori was in the service of Ieyasu at the battle of Sekigahara, which determined the successor to the Shogun Hideyoshi. There are no documents stating exactly what his responsibilities were, but conjecture and the rewards bestowed on him after the battle lead us to believe they were secret in nature. After the battle, which propelled Ieyasu to the head of power, Munenori was promoted to hatamoto, with a large income and title as head sword instructor to the shogunate.

The shogun's instructor at the time of this event was Ono Taddaki, founder of the Ono-ha Itto ryu, which has lead to many fictionalized accounts of rivalry between the Itto ryu and the Yagyu ryu. During Munenori's service to the second Tokugawa shogun, Hidetada, he also acted as his bodyguard. There is an account of Munenori slaying seven attackers singlehandedly while defending the shogun.

Under the third Tokugawa shogun, Iemitsu, who was Munenori's student from childhood, Munenori was promoted to the rank of sometsuke, head of all security. It was following this appointment that Munenori began the introduction of Zen Buddhism to his style. Focusing on mental attitude instead of technique, Munenori composed the Heiho Kadensho, the strategic guide for his system, which emphasized the Zen quality of the empty mind as being paramount to swordsmanship.

Munenori's eldest son, Jubei Mitsuyoshi, continued the Edo line of the Yagyu Shinkage Ryu and is perhaps one of the most written about Japanese swordman in history. His skill with the sword and pursuit of enlightenment through it set the stage for an era of enlightenment through martial arts.