Shadow Clone Technique

Similar to the Clone Technique, this jutsu creates clones of the user. Unlike the Clone Technique, these clones are actual copies, not illusions. The user's chakra is evenly distributed among every clone, giving each clone an equal fraction of the user's overall power. The clones are capable of performing jutsu on their own and can even bleed, but will usually disperse after one or two solid blows. They can also disperse on their own. The clones will be created in roughly the same condition as the original.

Unlike other clone techniques, they can't be detected by the Byakugan because the clones have the exact same amount of chakra and aren't made from any other substance, making them indistinguishable from the actual person. In the anime, Sasuke Uchiha claims that the Sharingan can distinguish clones from the original, however various events throughout the series seem to indicate that this is not the case, implying that the Sharingan was merely used to keep track of the original's movements.

Uses
A characteristic that is unique to the Shadow Clone, out of all other Bunshinjutsu, is that any experience the clones gain during their existence is transferred to the user once they are dispersed. This makes the technique ideal for spying, since the user can simply send a clone to spy on a target, then have the clone disperse itself without returning to pass the information back to the user. Any extra chakra the clone has when it disperses is also returned to the original.

It's also useful for training purposes, since the total amount of experience the user gains is multiplied by the total number of clones being used to train. This particular feature is not revealed until Part II by Kakashi Hatake. Attempting to use the clones for training purposes can be mentally harmful to the user, as frequent use of it in this manner can result in mental fatigue.

Disadvantages
Because of the manner in which the clones are created, the user must divide their chakra among the clones, potentially using up all their chakra fairly quickly if the user is low on chakra or makes too many clones. This is especially problematic when the forbidden form of the technique, Multiple Shadow Clone Technique, is used; whereas the normal version will only create a few clones, the Multiple Shadow Clone Technique can create hundreds.

Naruto is able to use this technique to the extremes that he does because of the Nine-Tailed Demon Fox sealed within him, which gives him an abnormally high chakra level. Even without the Nine-Tails' chakra, Naruto can make quite a few clones, but nowhere near on the level he can when he has access to the Nine-Tails' chakra. The clones, however, are apparently more susceptible to the Nine-Tails' influence, unexpectedly beginning to transform. It should also be noted that while Naruto was going into the Nine-Tails' cloak in his fight with Deidara, the other clones seemed to be choking and dying as if the Nine-Tails' chakra was killing them.