Hagoromo Ōtsutsuki

The was said to be the legendary figure who founded the ninja world and was the creator and first user of modern ninjutsu (essentially making him the first shinobi, in the modern context of the term), as well as the first jinchūriki.

Background
According to Jiraiya, the Sage was a priest who appeared long ago in an age of endless war. He was the first to explain the truth about chakra and tried to use his power and wisdom to lead the world to peace instead of war. The Sage travelled throughout the world, spreading his ideas and religion, the, which eventually came to be known as ninjutsu. His great deeds and true desire to bring peace to the war-torn world led him to become widely known as the.

According to Madara Uchiha, centuries before the beginning of the main story line the Sage defeated the most powerful demon in the ninja world, the Ten-Tailed Beast. In order to protect the world from the Ten-Tails, the Sage developed a new technique. The Sage was able to use this technique to seal the beast into his own body, allowing him to harness and control its terrifying power and making himself the first jinchūriki. Though he had successfully sealed the Ten-Tails, its power was so great that the seal would break after the Sage's death. Aware of this, the Sage used the rest of his strength to divide the beast's power into nine parts, which would become known as the tailed beasts. He then used the Chibaku Tensei to seal the Ten-Tails' remains and send them into the sky where no one could ever reach them, thus creating the moon. The Sage would leave behind a tablet for his descendants which details his history with the Ten-Tails. Only those who possess the Rinnegan can fully decipher what is written on the tablet, while a person with a different dōjutsu can still partially interpret the information.

The Sage's ultimate wish to establish peace throughout the world was a goal that could never be achieved within his lifetime alone. Knowing that his end was approaching, the Sage entrusted his strength, dream, and legacy to his two sons. The older son, who inherited the Sage's "eyes": the power of his chakra and his spiritual energy, believed that power was the true key to peace. The younger son, who inherited the Sage's "body"; his willpower and physical energy, believed that love was the true key to peace.

On his deathbed, the Sage chose his younger son to be his successor. Overcome by bitterness and envy, the older son attacked the younger, beginning a war between them. Their feud would continue on through their descendants: the Senju clan and the Uchiha clan.

Centuries later, the Rinnegan itself would resurface in Nagato. Nagato's connection to the Sage has yet to be explained, although Jiraiya believed that the Sage could have somehow been "reborn" as Nagato in the present era. Nagato himself, however, admitted that his own power paled in comparison to that of the Sage. Still others, such as Kakashi Hatake, believed that the Sage is merely a myth, and that the Rinnegan is merely a mutation. However, the Nine-Tailed Demon Fox's recognition of the Sage (and the tailed beasts' apparent status as the only survivors from the Sage's lifetime), lends credibility to his existence.

Appearance
Although depicted only as a silhouette, several details can be inferred about the Sage's appearance. He had long, spiky hair flowing backwards, in a style similar to Madara Uchiha's. He wore what appeared to be a cloak with a high open collar or armor similar to that worn by Hashirama Senju, showing his necklace with six red magatama, similar to the one worn by Nagato's Deva Path. He seemed to have had horns on his forehead; this could have been a forehead protector similar to the one worn by Jiraiya or, if the outline of Naruto's new seal is an indication, it might have been part of his hairstyle.

Abilities
The Sage was shown carrying two objects. One was what appeared to be a large katana in his hand, whilst the other was a shakujō, a Buddhist ringed staff which is meant to be used in prayer, but can also be effectively employed as a weapon.

Pioneer Ninja
The Sage was revered as the man to first understand the very nature of chakra itself. This wisdom, combined with his kekkai genkai, the Rinnegan, allowed the Sage to create the first modern ninjutsu. With such powers at his disposal the Sage obtained a huge following, as men and women from across the world strived to learn from his teachings. As the Sage's disciples grew greater and greater in number it led to the creation of ninja clans, and later, ninja villages. It is impossible to overestimate the Sage's effect on the course of the ninja world's development. As the first true ninja, he created the ninja world, revolutionized it, and left it forever changed.

Rinnegan
The Sage was said to have been the only shinobi to have fully mastered the Rinnegan, allowing him to manipulate all six types of nature chakra. He is revered as one of the most legendary figures in the Naruto universe, and is most likely the most powerful ninja that ever existed. He was so powerful that he created the moon using Chibaku Tensei. Even Nagato stated that his power paled in comparison to that of the Sage.

Jinchūriki
The Sage developed the first jutsu capable of sealing a tailed beast inside a human body, making himself the first jinchūriki in history. Having the Ten-Tailed Beasts' power contained within him, the Sage developed immeasurable power and chakra that far surpassed all of his peers. Even on his deathbed, the Sage was able to employ his Chibaku Tensei technique on a massive scale and use that chakra to create the moon and seal the body of the Ten-Tails within it, a clear testament to his incredible power.

Trivia

 * The necklace that the Sage wore might be a reference to the Yasakani Jewel; a legendary magatama necklace that is part of the Japanese Imperial Regalia, together with the Kusanagi Sword and the Yata Mirror. The Yasakani Jewel is the only one of these treasures yet to make an official appearance in the series.
 * The Sage shares the same nickname with the Third Hokage, Hiruzen Sarutobi. They were both known as the.
 * It should be noted that the Sage and the Ten-Tails had the Rinnegan, suggesting that the Sage may have obtained the Rinnegan after the Ten-Tails was sealed.

Quotes

 * (As quoted by Jiraiya)