Izanagi

Izanagi is a dōjutsu that has the power to connect illusion and reality, which the Uchiha clan deemed forbidden due to the terrible consequences of its use: The loss of one of the user's Sharingan. However, according to Madara Uchiha, only those who possess and can control the powers of both the Uchiha clan and Senju clan are capable of utilizing the complete form of this particular technique, although it seems that he still had to lose an eye for its use.

Izanagi is a genjutsu that's meant to be cast on oneself instead of others, and it's the most powerful among them. When activated, the caster removes the boundaries between reality and illusion within their personal space. To a degree, this allows the user to control their own state of existence. The actual effects of Izanagi vary from user to user, dependent on their level of dominance over the required bloodlines, but all seem to involve the ability to deem negative events an illusion and positive events a reality, in regard to themselves.

When Izanagi is activated, it is capable of turning injuries and even death inflicted upon the user into mere illusions. Whenever the user receives a fatal injury, he fades away as a genjutsu, and then returns back to reality, physically real and unscathed. Danzō Shimura, in an effort to make practical use of the jutsu, had ten Sharingan embedded onto his right arm. This allowed Danzō to increase the length of time that Izanagi can stay active, as well as the number of times he could use it in succession. However, not being of Uchiha blood, this technique requires substantial amount of chakra for Danzō to use, which is made possible only by the transplant of Hashirama Senju's DNA to increase his energy.

Though the sustained time of the jutsu is normally the briefest of moments, Danzō is implied to have had Orochimaru forcibly extend the time it takes for each eye to close to as long as one minute. After the aforementioned time, the eye used to activate Izanagi will permanently close and be stricken with blindness forever, which is not at all unlike Mangekyō Sharingan's overuse-induced blindness. It is this side effect of Izanagi that caused the Uchiha to label the technique a kinjutsu. It should also be noted that Madara was able to lose only one eye after five to ten minutes, obviously longer than what Danzō had achieved. This could be due to the fact that he is an Uchiha, or because he possesses the complete form of this jutsu, as he claims. Although The Sage of the Six Paths created this technique, it is unknown if he suffered the same drawback of blindness or if his Rinnegan somehow allowed him to escape this drawback.

The Sage is said to have mastered this technique, as he bore the origins behind the two necessary bloodlines, most notably using the ability in order to create the nine tailed beasts from the chakra of the Ten-Tailed Beast. As stated by Madara; the exact process he utilized initially involved the administration of imagination, and the spiritual energy which forms the basis of Yin chakra to create shape and form from nothingness. Then, through the application of vitality, and the physical energy which forms the basis of Yang chakra, he would breathe life into the prior form. Thus, a technique with the power to turn imagination into reality was born, known as Izanagi.

Influence
Like the various jutsu used with the Sharingan, this jutsu is named after a Shinto god. In this case, it is Izanagi, who, together with his sister and wife Izanami, created the islands and other deities of Japan.

One of the most famous stories about Izanagi tells the tale of how he goes into Yomi, the Japanese underworld, to retrieve Izanami after she died giving birth to the Shinto fire god Kagutsuchi. After he fails to retrieve her and leaves Yomi, he washes himself in a stream. As he cleans his left eye, Amaterasu is born, as he cleans his right eye, Tsukuyomi is born, and as he cleans his nose, Susanoo is born.