The yellow eyed demon, the one responsible for bringing the Winchesters into the realm of hunting. The one demon that always brings out some sort of emotional response out of the boys for what he had put their family through. The pilot episode of the series we see Azazel (yes that is his real name as it is revealed in the episode Sin City) visiting Sam's crib when he is a baby and bleeds into Sam's mouth. He is interrupted by Mary Winchester to which Azazel responds by pinning her to the ceiling, cutting her stomach and burning her down with the house. This is a trademark of Azazel to all of the mother's of his psychic children. Sam early in the show has visions of anything that leads them closer to Azazel, and frequently those visions led him to people like himself such as Max Miller, Andrew Gallagher, and Ava Wilson. In the end of season two, he had met his end right after he had one of his physic children open the Devil's gate. Dean killed Azazel by shooting him in the heart with the Colt after receiving some help from the spirit of John Winchester who broke out through the Devil's gate.
Azazel at first seemed as if that all he wanted was to create chaos by having these psychic children walk the Earth that he visited in their dreams. Frequently he'd tell them what to do, whether it was kill the neighbors cat or kill your abusive father. By the end of season two we were led to believe that Azazel created these psychic children to play as some sort of leader for the demonic army that was let out of the Devil's gate. Jake, after all was the one that opened the gate releasing hundreds of new demons on the world. Little did we know after all that Azazel had a much bigger end game up his sleeve that was set in motion long ago when he had spoke to Lucifer at the St. Mary's Convent in Ilchester, Maryland in 1972. Azazel killed a group of nuns in the church allowing Lucifer to "whisper through the door" to his devout follower. Lucifer commends his follower for his faith and Azazel simply asks how to break him out from his cage, which the Convent sits on. Lucifer asks him to free Lilith, for she can break the seals that have bound him in Hell, while Azazel is skeptical considering how hard of a task it will be. Lucifer then asks for a child, a special child, this child is meant to be his vessel when he breaks out, also to open the Devil's gate and to kill Lilith effectively breaking the final seal.
Azazel always saw Sam as the best ever since he caught his mother's scent back in the episode "In The Beginning." It was never said, but the fact that the Convent that Lucifer's cage sits on is named Mary had to play a part in how Sam was favored above all the other children. It also of course helped that Sam had a good heart and was a hunter already so that he could protect himself. Frederic Lahne, the actor that played Azazel in a few episodes, added that he felt that if his character was able to corrupt someone as good as Sam that he had won no matter what the final outcome would be.
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In terms of standing with the other villains that we have seen on Supernatural, Azazel is most likely the best of them all. Granted he wasn't in very many episodes and didn't have very many lines but when he was on the show it was always in a big way. Sam and Dean's hatred for him and downright fear of him was always evident. When Dean contracted the ghost sickness in "Yellow Fever" (yes it is a real thing in the world of Supernatural, I am not making up ghost sickness) he began to hallucinate. One of his most terrifying hallucinations was that of Sam having yellow eyes. It is a little bit of a disturbing scene, because at the time we could actually buy the fact that Sam could complete go to that side seeing how he had been using his psychic powers. Later on in the season when we see Sam going through a rough detox from his consumption of demon blood he even has a hallucination of a younger version of himself berating him for what he has become. The younger Sam is shown to have yellow eyes at the end of the hallucination. This feeds on Sam's own fear of what he is doing may lead him to become ultimately what Azazel wanted out of him.
Supernatural has had many great villains over the years such as Lucifer, Crowley, Lilith and even Alistair but Azazel stands on a pedestal above them all. Not only was Azazel a worthy adversary but he was also a key element in the evolution of the plot and the characters. If it weren't for him then there very well wouldn't be a reason for the Winchesters to become hunters, which then would lead us to not having this great show. There wasn't a villain after him that invoked such an emotional response from the Winchesters, except maybe Lucifer at times.
On a side note however, I'm I the only one that feels a little bit sorry for the hospital janitor that Azazel possessed in season two? He was shot and killed by Dean, then Sam and Dean stood over his dead body saying that was for my Mom, that was for my Dad, and most of all that was for me. I understand they were talking to Azazel, but the body was some innocent bystander, anyone else for sorry for the guy? Or is it just me? It's probably just me.