The heart of Masakado's uncanniness lies in the story of the severed head. It does not appear in the contemporary Shōmonki^[1] that records the revolt, but is a legend told far later, in works such as the Nanboku-chō-period Taiheiki^[2]. According to it, Masakado's head, exposed at the Shichijō riverbed in the capital, did not rot for several months; with eyes wide open it gnashed its teeth, and night after night it cried, "Where is my body? Join it to me and let me fight one more battle." When a man named Tōroku Sakon addressed it with a comic verse—"Masakado was cut down from the temple of his brow, by the stratagem of Tawara Tōda"—the head laughed dryly, and that night, emitting a white light, it flew off toward the eastern lands.

The place where the flying head is said to have fallen is the present-day Masakado Grave-Mound (the Head Mound)^[3] at Ōtemachi in Tokyo. This mound has been feared even into modern times, on the belief that attempts to relocate or demolish it bring disaster. When the Ministry of Finance built a temporary office over the mound's site after the Great Kantō Earthquake, the successive deaths of those involved, and the postwar overturning of a bulldozer that killed its driver when the ground was to be leveled, are told as the curse. Yet the deaths of the Finance Ministry officials came several years after construction began and are hard to link causally; these belong largely to modern urban legend. The frog figurines offered at the mound play on the pun that the head "returns" (kaeru) to the east, kaeru also meaning "frog."

Masakado is also a textbook case of a cursing vengeful spirit turned into a protecting god. In the second year of Enkyō (1309), when a plague was attributed to Masakado's curse, the Ji-sect holy man Shinkyō Shōnin is said to have pacified his spirit and enshrined it in the auxiliary hall of Kanda Myōjin^[4]. When Tokugawa Hidetada moved the shrine to its present site in the second year of Genna (1616), Kanda Myōjin became the great tutelary of Edo, and the deity Masakado drew reverence as a god of warding off calamity, martial fortune, and thriving commerce. In the Meiji era he was once removed from the main hall's enshrined deities as a traitor, but was restored as an enshrined deity in 1984. The Kokuō Shrine at Bandō, the place of his end, is said to have been founded when his third daughter, the nun Nyozō-ni, carved a seated image on the thirty-third anniversary of her father's death.

Masakado is counted, together with Sugawara no Michizane and Emperor Sutoku, among the "Three Great Vengeful Spirits of Japan." Yet, as Yamada Yūji and others point out^[5] in the study of vengeful spirits, the grouping of these three is an early-modern framework that spread through the popular fiction and kabuki of the Edo period. It should further be noted that the tale of Princess Takiyasha, who commands a giant skeleton, is a later derivative of kabuki and popular fiction with Masakado's daughter as protagonist, and is distinct from the traditions of Masakado himself.