He was the original owner of the Susano'o Unit armor (which now belongs to Hakumen), and it is assumed that, after realizing he was forever linked to the Master Unit while in the armor, he drove himself out of it - which is possibly why he now appears as a ghost. He was formerly sealed away in the Boundary after Hakumen sacrificed himself to pull him in, with help from Jubei. He was later released before the events of BlazBlue: Calamity Trigger by Takamagahara.
Years before the events of Calamity Trigger, Terumi had appeared at Celica's church, where Ragna, Jin, and Saya lived. Upon arrival, he killed Celica. After possessing Jin, Terumi burned down the church, cut off Ragna's arm, and abducted Saya. For much the events of the first game, Ragna believed Jin to be responsible for this incident.
During the majority of Calamity Trigger, Hazama is supervising Noel Vermillion's mission to return major Jin Kisaragi to his post, and attempts to avoid fighting anyone, claiming he "isn't good with that sort of thing". However, during Rachel Alucard's story mode, he appears twice as Terumi, the first time mocking Valkenhayn, and the second time mocking Rachel herself.
After the final fight of the True Ending in Calamity Trigger, he appears before Noel and Ragna, and after Rachel arrives, he loses his calm demeanor. His hair spikes up and his voice becomes much louder. Rachel and Ragna, having recognized Terumi from the attack on the church years before, attack him immediately, but he simply shrugs it off, and begins to taunt Ragna over the church attack before departing. After the credits roll at the end of the True Ending, he is shown issuing confidential verbal orders to Tsubaki to kill Noel and Jin.
In BlazBlue: Continuum Shift, he appears as the main antagonist and a playable character, planning to destroy the core unit, Amaterasu, using Noel Vermillion, who becomes the Perfect Murakumo Unit, Kusanagi - Mu-12. He sacrificed many NOL members in order to temper her. When he and Ragna battle, the former overwhelms the latter and proceeds to take his life. But Nu's soul in Lambda's body sacrifices herself to protect Ragna and gives him her Idea Engine before dying. This allows him access to the True Azure and he defeats Hazama. However, Ragna does not kill him, and the latter calls the former a chicken before falling unconscious. During the ending it is revealed that Hazama and Relius Clover are working for Ragna and Jin's little sister Saya, who is now the Imperator of the Novus Orbis Librarium. In the post-credits sequence he is shown standing over a Cauldron containing the remains of Nu-13 with Relius, commenting that it could be used to make the "Sword of the Imperator" (イザナミノツルギ, Izanami no Tsurugi, Sword of Izanami in the Japanese dub).
It is revealed that Terumi, like Hakumen and Rachel, will fade away without an Observer. Takamagahara, and later Mu (with the power of the Eye), with whom he shared a Life Link, observed him in BlazBlue. However, Mu lost her power after she turned back to Noel and Takamagahara was attacked by a magical virus from Phantom, losing its power. Terumi did not fade away, however, because he had awakened Saya, using her as his Observer and presumably turning her into the person she has become, much like he did with Noel/Mu. As an added measure, he is using Ragna's hatred as a force to bind him to this world, as well.