A Sorrows child wandered into a yao guai's cave, before her naming ceremony, and was eaten by the beast. The Sorrows believe that the little girl and the yao guai became one, hence the name "Ghost of She".
This yao guai is an oversized variant with a flaming body. It has a phenomenal attack power which can kill a heavily armored person in just a few blows, and after taking enough damage can create several doppelgangers of itself. Some of her strange physical characteristics are a result of the Courier being under the influence of sacred vision tea, a datura derived drug.
↑The Courier: "Tell me about the Ghost of She." Waking Cloud: "That is a sad story. I do not like to tell it, but if you are asking, it must be at White Bird's request. That, I will honor. Long ago, a girl lived among this tribe. She was a curious child, and a clever one, and her mother had a devil's time watching over her. One day, the child slipped away from camp and went to play in the caves nearby. The girl did not know that a Yao Guai slept in that cave. The girl died. The tribe wept, for the girl had died before her naming day, and her ghost would remain restless and wandering upon the earth. Many hunters tried to kill the beast, but it eluded them, or drove them off. The shaman said that since it had consumed the girl, the two were one. So we call the beast Ghost of She, for the child had no name to be called. That is the story of the Ghost of She. It is a sad story. It is our story." (Waking Cloud's dialogue)