The Valley of the Spirits was the location of a Tusken Raider settlement that met its end at the hands of Anakin Skywalker in 22 BBY, resulting in a massacre.
After his mother's passing in his very arms, Anakin unleashed a wave of vengeance, a brutal onslaught eliminating every Tusken within the encampment.
Subsequent discovery of the camp's remains by other Tuskens led them to believe the area was haunted by a malevolent spirit or demon, which they attributed to the deaths of their fellow Raiders. In 4 BBY, Luke Skywalker and Biggs Darklighter, observing a group of Tuskens from afar, ventured to the site after the Tuskens departed. Luke, unknowingly employing Psychometry at the location, experienced a profound unease and implored Biggs to leave immediately; he later described the sensation as surpassing any nightmare and considered it his first true encounter with terror.
During the era of the Galactic Civil War, a Force-sensitive spacefarer undergoing training to become a Jedi utilized a crystal attuned to the Force to communicate with a Jedi Master known as Nos'lyn. The Master assigned the trainee two tasks to aid in their meditative practice. Initially, the apprentice journeyed to a Force nexus on Tatooine, an oasis where predators and prey coexisted peacefully as herbivores. However, shortly thereafter, the Jedi Master dispatched the trainee to the Valley of the Spirits, where the same species of creatures were engaged in violent conflict amidst the ruins of the Tusken camp, a consequence of the potent dark side aura permeating the area. The spacer received instructions to end the suffering of these creatures.
Tusken Raiders who visited the camp regularly offered sacrifices of objects and living beings to appease the ghost. While they typically sacrificed animals, in 8 ABY, they abducted Kitster Banai, the painter and brought him to the Valley of the Spirits, intending to sacrifice him to the "angry ghost" responsible for the slaughter of an entire tribe with a "glowing, humming sword." Ironically, he was a long-time friend of Anakin's. Han and Leia Organa Solo, also ironically Anakin's son-in-law and daughter, intervened to rescue Kitster.