Yutagawa Onsen's kagura (a Shinto ritual involving dance and music given in honor of the Shinto gods) tradition is very old and hard to date. Still, we know it was celebrated the most during the peaceful ages of the Edo Period, between 1620 and 1850.
It was so highly considered that the lords of the region, the Sakai family, called the dancers to perform the kagura at their residence. Yutagawa Onsen's kagura is very particular for its music: it integrates Indian melodies, very unusual for this kind of performance.
Yutagawa's kagura has, of course, roots in the Shinto tradition, but it is primarily a popular tradition that has evolved as an actual "festival" for the people. This is why the dance is also performed in the streets, besides the performance inside the Yuzusame shrine. As the Japanese author Fujisawa Shuhei describes it in his book "The Bamboo Sword," adapted in the movie "The Twilight Samurai" by Yamada Yoji in 2002, the Yutagawa Onsen Kagura is a humorous, cheerful festival, destined to make people laugh and surprise children.