Sensui killed him. That sent Hiei, Kurama, and Kuwabara's powers through the roof. But, it still wasn't enough to beat him. But, Yusuke was a descendant to the Ma-Zuku (Raizen). Thus, he was restored before King Yama's agents were able to take his body. Then, he went to Demon World, which was where everyone was, and fought with Sensui. He was good, but not enough to beat Sensui again. But then his anscestor (Raizen) possessed his body and killed Sensui.
That stirs up this whole chain of events which leads to the last saga.
Edit: See, that's why this show is under-rated, because no one got to see the 2nd half of the episodes. They took it off television.