The Katana is a weapon used exclusively by Oliver that is first acquired in the last room of Oliver's Campaign Stage 1 in Battle Bears -1 as he enters the Dojo in Stage 2. A cutscene shows the weapon being forged from a plumbing pipe, using the intense energy of a Red Huggable's hug. In game, it is titled "Special" when switching weapons, and is collected by retrieving blue "S" (Special) pickups. Although it is a sword, you still need to replenish its ammo, as it depletes each time a Huggable is hit, probably because its durability wears out. Ammo is not lost if nothing is hit. It can kill all Huggables except for the Yellow Huggable and the WTF Huggable in one hit.
In the Katana's Hyper form, its size is increased, giving it a much wider range. However, you cannot increase its ammo until it is fully depleted, and the ammo runs out twice as fast.
It deals 75 damage in both hyper and normal mode.