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.

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 Saviour of the World. According to legend, the Sage also used Chibaku Tensei to create the moon at some point during his life.

According to Madara Uchiha, centuries before the main story line, the sage defeated the most powerful monster in the ninja world, the Ten-Tailed Beast. In order to protect the world from the beast the sage developed a new technique. This technique sealed the beast into the sage so he could control it. This was why the sage was known as a god to the ninja world. Though he had sealed the beast, its powers were so great that the seal would break after the sage had died. Knowing this, the sage used the rest of his power to divide the beast's power in to nine parts; now known as the nine tailed beasts. The Ten-Tails' body was then sealed away and sent into the sky where no one could reach it, thus becoming the moon.

The Sage's ultimate wish to establish peace throughout the world was a goal that could never be achieved within his lifetime alone. Near his end, the Sage therefore entrusted his strength, dream and legacy to two brothers. The older brother, 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 brother, 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 the younger brother to be his successor. Overcome by bitterness and envy, the older brother 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.

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 magatama. He seemed to have horns on his forehead; this could be a forehead protector similar to the one worn by Jiraiya.

Abilities
The Sage was shown carrying two objects. One was what appeared to be a sword across his back, 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.

Rinnegan
The Sage was said to have been the only shinobi to have mastered the Rinnegan, which presumably laid the groundwork for the other two great dojutsu, the Sharingan and the Byakugan. He is revered as one of the most legendary figures in the Naruto universe, and is likely the strongest ninja that ever existed. He was so powerful that he created the moon using Chibaku Tensei.

Jinchuriki
The Sage developed the first jutsu to seal a tailed beast inside a human body. Having the Jubi inside him, the Sage developed immeasurable power that surpassed all peers. Even on his deathbed he was able to use that chakra to create the moon.

Trivia

 * Pain's Deva path wore a necklace very similar to the one worn by the Sage of the Six Paths, although Pain's was black while the Sage's was white. This might be a reference to the fact that they were similar, as they both had the Rinnegan, whilst at the same time very different, as Pain's twisted idea of peace threatened to destroy the world the Sage had devoted his life to create.
 * The necklace of the Sage of the Six Paths 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.

Quotes

 * (As said by Jiraiya)