Warring States Period

Before the village system was established with the founding of Konohagakure by Hashirama Senju, the was an extremely bloody period in history where the hundreds of individual shinobi clans fought in constant, bitter warfare. By the end of the conflict the two most powerful clans to participate in the period were the descendants of the Sage of Six Paths: the Senju clan and the Uchiha clan.

History
During this time period, the average life-span was a scant 30 years for both shinobi and civilians alike. However, the biggest loss in the era was the conscripted children in the individual clans which were forced to fight in the front lines, often slaughtered by the more experienced adults which lowered the overall life expectancy. Hashirama lost his brother Itama Senju and his clansman Kawarama Senju in this era, while Madara Uchiha lost up to three of his four brothers.

Both Hashirama and Madara, along with their respective younger brothers Tobirama and Izuna, grew and become infamous leaders of their respective clans. Despite the friendship they made as children, Hashirama and Madara engaged each other in a number of battles, with Madara's survival enhancing his own reputation as a legendary shinobi. But during this time, Madara and Izuna discovered the secret of the Sharingan; becoming the first two Uchiha to awaken the Mangekyō Sharingan after killing their comrades. During these constant battles with the Senju clan, Madara's vision degraded further and further until he had to steal his brother's eyes, gaining a Eternal Mangekyō Sharingan to keep fighting his friend and rival during the war at cost of suffering his clan's Curse of Hatred.

However, after decades of fighting, most of the clans in the Land of Fire, under the Uchiha and Senju banners formed a first lasting truce after being bled dry. The only person who opposed the peace was Madara, who argued for the Uchiha clan to continue the fighting but was persuaded to join in a permanent alliance with the Senju clan, and Konoha was formed.

Senju Clan
The Senju clan descended from the youngest son of the Sage of the Six Paths and were considered to be one of the strongest clans in the ninja world at the time of the Era of the Warring Clans. Unlike their rivals and other clans, the Senju mastered various forms of ninjutsu that gave them fame as the "clan of a thousand skills". When Hashirama succeeded his father, he intended to end the conflict that raged between him and the Uchiha as well as the unneeded killings of ninja and civilian alike.

Uchiha Clan
The Uchiha clan descended from the eldest son of the Sage of the Six Paths. Their bloodline enables them to access the Sharingan which has been both a blessing and a curse due to the mortality rate at the time. Though his kin eventually decided to end their feud with the Senju, only Madara could not truly embrace peace.

Trivia

 * The Era of the Warring Clans could be named after the or Warring States Period, a time when Japan was in civil war and the demand of ninja was high. This moment in history was the time of many of famous ninja, including Sasuke Sarutobi. But after the war resolved, their services where cut in a united Japan, ninja began to fade into history.