After escaping from the Magaki group, Utakata and Hotaru are found by the Hunter-nin, who reveal themselves to be after Utakata for killing his master and fleeing his village. Team 7 arrives to save them and, discovering that they're after Utakata, Yamato tries to negotiate with them. Tsurugi reveals himself and decides to have a talk with Yamato and Utakata alone. Tsurugi says to Yamato his unit will free Hotaru and will hold off their capture of Utakata until Team 7's mission is complete. After that, he speaks with Utakata alone, where he tries to convince him to return to the village. With what his former master did to him, Utakata refuses, and Tsurugi argues that his master had only tried to free him from that "thing," though Utakata still refuses to believe it. Once their talk was over, Tsurugi and his unit leave and say they will be watching them.
When Utakata ponders on if Tsurugi was telling the truth, he goes out to search for him. Tsurugi, noticing Utakata is looking for him, goes to see him but him and his unit run into the Animal Path of Pain's Giant Multi-Headed Dog summoning and are killed. When Utakata tries to find him again after the ninja bandits are defeated, he stumbled upon Tsurugi's bloodstained mask before Pain appears and captures him.
Trivia
Tsurugi shows several parralels with Kakashi Hatake in that they both-:
Have a scar running through their left eye.
Were members of their respective village's ANBU.
Show concern for their respective Jinchuuriki Juniors.
Seem to have an understanding of the person closest to the Jinchuuriki, Kakashi with Minato Namikaze and Tsurugi with Harusame.
Both were killed by Pain, although Kakashi was revived.although he had not actually been killed by pain but through extensive use of the mangekyo sharingan