Hiisi was originally a place — a sacred grove, a holy mound, a stone-circle in the woods — where the early Finns made offerings to the dead and to the spirits of the land. The word Hiisi meant such a place, and the persons or powers worshipped there. With the coming of Christianity, the meaning shifted: a hiisi became a forbidden place, a haunt of demons, and Hiisi himself (now in the singular, personified) became a forest-demon whom Christians must avoid.

Hiisi in the Kalevala is consistently a malevolent figure — the maker of dangerous things (the moose of Hiisi, the elk of Hiisi, the cat of Hiisi), the giver of obstacles to the hero, the embodiment of wild and uncontrolled nature against the cultivated and civilized human world. He had a court of his own, with his own attendants and beasts, and he was sometimes referred to as the Lord of the Mountain (probably an old name for the prehistoric burial-mound to which he was attached).

The transformation Hiisi underwent — from sacred place, to power of the place, to demon of the place — is paralleled in many religious histories, where the older holy site becomes the Christian cursed place. The English "hag" originally meant a hedge-witch, a wise woman of the boundary; the Finnish hiisi follows the same demoting trajectory. By the time of the Kalevala's composition (mid-nineteenth century, but drawing on songs much older), Hiisi was firmly negative — a demonic adversary whom the heroes battled with charms and spells. But the older ritual sense of the word survives in numerous Finnish place-names: Hiidenmäki (Hiisi's Hill), Hiidenkangas (Hiisi's Heath), Hiidenniemi (Hiisi's Cape), all over Finland, mark the locations of pre-Christian sacred grounds.