Onimusha: Way of the Sword is set in historic Kyoto during Japan's Edo period. The official description says that malevolent clouds of Malice twist the capital, turning a city known for shrines and temples into an eerie and foreboding place.
Kyoto and Malice
Malice is the force that allows the Genma to appear in the living world. This gives the setting its central contrast: real historical locations sit inside a dark-fantasy conflict against underworld creatures.
The official page specifically mentions Kyoto landmarks such as Kiyomizu-dera Temple. It does not yet provide a complete map, fast-travel list or area-by-area walkthrough, so those details should not be inferred from trailers.