The Sword of Tengu (also known as the Goblin Blade in the 2003 game) is an energy weapon created by the Utrom Shredder, Ch'rell. It first appeared in Darkness on the Edge of Town, was destroyed Return to New York, Part 3, and was made in Secret Origins, Part 2.
HistoryAs the new Shredder, Ch'rell had a number of sword smiths to craft the blade out of Utrom metal. Once it was completed, he attached it to a handle, electrifying it. He quickly came up with a tale of its creation, how it "fell from the Heavens and was crafted by Goblins", and attacked the crafters.
"I have never seen such power."
"Nor will you ever again
Using the sword, the Shredder conquered Japan, brought the Tokugawa clan to power. But due to some unexplained reason, he lost the sword which eventually ended up in a museum in New York. Ch'rell sent his Foot Ninja to retrieve the sword, which he had two techs use as a component of a sonic cannon to excavate an Utrom exo-suit from Hudson river. But the Turtles managed to retrieve the sword.
Later, when the Shredder assumed they were dead, the Turtles strove to take down the Shredder and brought the Sword of Tengu with them. It proved valuable when they faced the Foot Mystics, as Splinter, without the glove, defeated them. But at the top, Ch'rell reclaimed the sword but lost it again to Leonardo. In a slash off, Leo cut off the Shredder's head, not knowing of his Utrom nature. Coupled with Baxter Stockman's cybernetic arm, the sword's energy rendered the tower useless, in which a feedback loop destroyed the sword.
According to Splinter, the Sword of Tengu is a "potent mix of science and sorcery." Using magic and Utrom technology, the sword is exceptionally powerful. It can fire sonic waves when swung that can obliterate anything and anyone in its wake (if it doesn't just injure them). Shredder bragged that with the sword he laid villages to waste, brought castles to ground, and vanquished armies, giving hint to its true, terrible and destructive potential. The proof of its mystical capabilities is when Splinter used it to defeat the Foot Mystics, believing that, "conquering our mystic foe requires a mystic weapon."
However, the weapon is so powerful, wielding it is almost impossible - it shocks (perhaps lethally) anyone who tries to so much as grasp it. There are only two ways to wield the sword: by using a customized protective glove (or, in Shredder's case, a customized Utrom exosuit), or by being a true master of Ninjutsu, whose powerful will enables them to wield the sword, but not without burning their hands.
The Sword of Tengu is used by the Utrom Shredder in the 2003 video game, Teenage Mutant Ninja Turtles 2: Battle Nexus and Teenage Mutant Ninja Turtles Smash-Up. In the TMNT GBA game, the Sword of Tengu is a trophy you get for beating the game.