The Blue Night refers to the day sixteen years ago, when Satan murdered a huge number of the world's greatest holy men. On that day, all the powerful Exorcists of the temple, including the Ossama, suddenly started shedding blood from all over their bodies, and breathing blue flames. As they died one after another, the Ossama, who was just a monk in training back then, sat crouched in a corner of the holy hall, praying for the whole length of the night. Afterwards, even though the Ossama took over the temple himself, everyone became afraid that all those monks had suddenly died on the same day and so the temple lost a lot of worshipers and pilgrims. Before long, the place was known as The Cursed Temple.
Ryuji Suguro's temple was destroyed during the Blue Night and his grandfather was killed. This is the reason that he is persistent to kill Satan. Konekomaru Miwa's parents were also killed in the Blue Night, though he is not as determined as Bon to kill Satan, he is afraid of the incident and also Satan.
In the anime only, It is later revealed that Satan murdered the people to find someone who he could possess without any ill effects to save Yuri Egin, who was going to become executed by the Vatican for bearing his children. Yuri's own father Ernst Frederik Egin , who was a Cardinal at that time, condemned his own daughter to death and was the one whom Satan possessed to free Yuri. Afterwards, Ernst Egin is horribly burned on one side of his face but survives.