Demons are called Tatari Gami in Japanese. It means "cursed gods", but it infests all creatures, even humans.
Demon Worms are red/black, maggot-like creatures that emerge from gods turning into demons. They don't appear to have any eyes, but it does appear that they have mouthes in some parts.
Lady Eboshi uses toxic cannon ammunition and Jigo's tracker uses the poison, too. The poison weakens the flesh, which affects the mind of its host. Then the victim looses control of itself and turns in to a demon with hateness only in mind.
Ashitaka is infested with the poison after fighting Nago. But he doesn't become a demon. Instead, he is granted with power, which eats at his lifespan. It shows that the host must really hate something in order to become a demon.
When a demon touches the ground, the plants instantly die.
There is no known cure besides the blood of the Forest Spirit. After the spirit dies off, Ashitaka is cured from it.
Two characters become demons:
Three more characters are infested by it: