The sea of Chaos that existed in the beginning contained all the elements and was watched over by three kami (spirits) in Heaven who decided that a world should be created. Gods and goddesses were created, including Izanagi and Izanami. Izanagi was given a magic spear, and when he and Izanami descended to the chaos, he stirred the sea with his spear. When he pulled the spear out, a few drops on the end of it came together and formed an island when they fell back into the Chaos.
Izanagi asked Izanami to describe her body, and she said it was beautiful, but that there was a place between her legs where the skin hadn't joined. Izanagi became curious because there was a spot between his legs where flesh stuck out. They joined the two parts together, and then Izanami began giving birth to many things. First came a leech, which they put in a reed basket to float away. Next came the Foam Island and that was useless. Then came the islands of Japan, waterfalls and mountains, among other natural wonders. The Fire Spirit was given birth to, and Izanami fell very ill because it had burned her body severely.
Izanami descended into the Land of Night while Izanagi wept tears for her. He begged her to return, but she answered that she couldn't because she'd eaten some of the food from that land. Izanagi tried to retrieve his wife, but found she had decomposed horribly, and he was repulsed by her. He tried to run away, but she called after him and then sent the Ugly Night Spirit after him when he wouldn't obey. He eventually escaped into the upper world, and Izanami became even more set on getting him back. She sent all sorts of demons and creatures after him, but he ran away from them all and eventually dispelled them when he threw peaches at them. Even now, peaches are used to get rid of evil beings.
Izanami threatened that she would kill a thousand people every day if Izanagi didn't return, but he countered her threat with one of his own: he would make a thousand people be born every day, and so death and birth arrived upon the earth.
Izanagi washed himself of all the things that had attached themselves to him while he was in the Land of Night and from these actions, gods and goddesses came into existence: Amaterasu Omikami (sun goddess and ancestress of the emperor) came from the washing of his left eye, and Tsukiyomi-no-Mikoto (the moon) came from the washing of his right eye. The storm god Susano-O was created from the washing of his nose.