The Assassin of the Mist!

is episode 7 of the original Naruto anime.

Synopsis
Team 7 was journeying upon a small motorboat owned by a commoner, Kaji, towards the Land of Waves. Thick layers of mist swirled around the boat. Naruto said something loudly, to which Kaji hurriedly silenced him. "Why do you think we're rowing instead of using the engine and moving under cover of the mist? It's so we don't attract attention," he rebuked. Naruto recognized his mistake and hastily covered his mouth.

Kakashi asked Tazuna why he had told Konoha that this was only a C-Rank mission, while it obviously fell into the B-Rank or A-Rank category. Kakashi then threatened to abandon the mission if Tazuna did not provide an adequate explanation. Tazuna replied that even the nobles of the Land of Waves were impoverished. He would not have been able to afford a B-Rank or A-Rank mission. Additionally, he told them that an extremely wealthy businessman called Gatō was responsible for his country's struggles. Gatō had monopolized the Land of Waves' trade, thus earning a massive profit at the expense of the residents of the island. Tazuna then convinced them into continuing the mission after a hefty guilt trip that involved how heartbroken his family would be if Tazuna died. Moments later, they disembarked at a small port upon arriving in the Land of Waves, and continued on foot.

As they traveled down a small dirt road, Naruto, determined to surpass Sasuke, hurled a kunai knife at a bush, startling and alarming his comrades. It turned out to be "nothing, just a mouse". Sakura reprimanded him for it, but Naruto pitched another kunai at another bush in the opposite direction. An annoyed Sakura hit him on the head this time, calling his act "so obvious it's pathetic!" Naruto swore that he sensed something in there, which turned out to be an extremely terrified snow rabbit. Naruto apologized and sympathized profusely with the rabbit, picking it up and gathering it in a crushing hug. While the others passed it off as Naruto's usual idiocy, Kakashi noticed that, strangely enough, the rabbit's fur was white. Snow rabbits only have white fur during winter, indicating that this rabbit had been raised indoors. This rabbit belonged to someone nearby and had most likely been used for a Replacement Jutsu.

Kakashi suddenly told everyone to duck just before a giant Zanbatō spun over them, nearly decapitating them all. The Zanbatō crashed into a tree, and a rather tall ninja with a bandage mask covering his nose and mouth leapt onto the handle of the sword. The ninja revealed himself to be Zabuza Momochi, a missing-nin from Kirigakure, the Village Hidden in the Mist. Zabuza demanded to have Tazuna, to which Kakashi refused. A confrontation was inevitable.

Kakashi recognized him as the Demon of the Hidden Mist, and stated that he would have to use "this" to defeat him. He pulled up his forehead protector to reveal a red eye with three tomoe, which was revealed to be the Sharingan. Zabuza hinted that he knew of the Sharingan, and said that he was honored to see it in action.

Naruto wondered what this "Sharingan" was. Sasuke immediately recognized it and explained that the Sharingan is a Dōjutsu that can immediately see and anticipate all ninjutsu, genjutsu, and taijutsu at hand. Naruto, Sakura, and Tazuna were rendered speechless at this information.

Sasuke was puzzled, however. The Sharingan is a rare kekkei genkai exclusive to the Uchiha clan, which is Sasuke's clan; however, Kakashi was not an Uchiha, yet he possessed the Sharingan. Sasuke wondered if Kakashi was in fact a member of his clan.

Zabuza told Sasuke that his statements on the Sharingan's capabilities had only "scratched the surface". He continued with the explanation, saying that the Sharingan can also copy any of these three types of techniques by simply observing them, thus enabling the user to instantly and flawlessly perform it and reflect it back at his or her opponent.

Zabuza stated that he was after Tazuna, and informed Kakashi that he had been included in his Bingo Book as a highly dangerous ninja who had earned the nickname "Copy Ninja Kakashi" for copying over 1000 ninjutsu, and that he would consider it a testament to his own skill if he killed him too.

He then finished the conversation with the Hidden Mist Technique, which summoned a thick veil of mist from the nearby lake in order to hide him from the Sharingan. Kakashi ordered Team 7 to assume the Manji Formation.

Sasuke almost collapsed from the atmosphere of two Jōnin about to clash, thinking to himself that it was "enough to make someone choke". He resisted this feeling, however, stating that he would rather die than accept this. Kakashi noticed his nervousness and told him to calm down. "I will not allow my comrades to die! Trust me." Zabuza said that it was useless, and instantly appeared in the center of the formation, freezing everyone in fear. Zabuza stated that it was over, and prepared to strike them all with his Zanbatō. Kakashi raced toward them and stabbed Zabuza in the stomach with his kunai just before his stroke could fall. Water started to pour out of Zabuza's body. It collapsed into a puddle of water as the real Zabuza appeared behind Kakashi, revealing that he had used the Water Clone Technique. He then sliced Kakashi in half at the waist. However, Kakashi's body also dissolved into water upon contact, surprising Zabuza as he realized that Kakashi must have copied the technique as he charged towards him. Kakashi appeared behind Zabuza, catching him off guard, and held a knife to Zabuza's throat.

Trivia

 * In episode 17, in a flashback, a young Haku was shown chasing after a white rabbit which Zabuza then picked up and handed to him, before patting Haku on the head.