The Collaborative International Dictionary of English v.0.48:

Demonize \De"mon*ize\, v. t. [imp. & p. p. Demonized; p. pr. &
   vb. n. Demonizing.] [Cf. LL. daemonizare to be possessed by
   a demon, Gr. ?.]
   1. To convert into a demon; to infuse the principles or fury
      of a demon into.
      [1913 Webster]

   2. To control or possess by a demon.
      [1913 Webster]