Iaido, approximately 'the way of mental presence and immediate reaction', is a Japanese martial art associated with smooth, controlled movements of drawing the sword from its scabbard, striking or cutting an opponent, removing blood from the blade, and then replacing the sword in the scabbard. Modern day iaido exponents typically use a blunted metal practice sword (iaito) for practice, especially among beginners, while many advanced practitioners use a sharpened sword (shinken).

Muso Shinden ryu is a branch of the discipline iaido. The art can be traced back to the originator of iaido, a samurai named Hayashizaki Jinsuke Minamoto no Shigenobu (1549-1621), in some traditions known as Hojo Jinsuke Shigenobu. Many schools of swordsmanship developed from Hayashizaki's teaching, including Tamiya Ryu and Muso Jikiden Eishin Ryu.

In the 18th century the school of Muso Jikiden Eishin Ryu split into two factions with rival soke (head masters). The Shinomura branch was the one that evolved into Muso Shinden Ryu. Nakayama Hakudo (1869 - 1958) became the soke of the Shinomura branch and revised the curriculum. He laid out a plan of study having students pass through Shoden (entry level), Chuden (middle level), and two sets of Okuden (inner level).

In addition to the revised curriculum he also modified some techniques (for example the noto is now done level rather than at an angle). Some argue that many of these changes were made because of Nakayama's experience with other martial arts since he was highly ranked in other schools of kenjutsu and jodo. An example is how noto was changed to the noto of Shindo Munen Ryu Kenjutsu as done in its Suwari waza and Okuden: Tachi Iai. Muso Shinden Ryu is one of the most popular koryu of iaido but it also has kumitachi kata (paired kenjutsu exercises) that run parallel to the curriculum. In fact, it has more kumitachi kata than iai kata. Many take this evidence that what we call Muso Shinden Ryu iaido today was a much bigger system consisting of not only swordsmanship but Yawara (Natsurabara Ryu) and Bojutsu (Itarabashi Ryu).