The Night of the Tragedy

is episode 359 of the Naruto: Shippūden anime.

Summary
With the increasing number of assignments, Danzō appoints Itachi to the rank of captain. Koharu voices her concern at Itachi's promotion, as does Homura. Kakashi warns Itachi not to get involved in any of the political problems of the higher-ups: the latter thanks Kakashi for all his assistance over the last two years. In the Third Training Ground, Tenzō also voices concern for the promotion, but is stopped as Yūgao appears and informs them that she is the replacement in the team. Elsewhere, Itachi informs Danzō that dissatisfaction is beginning to run high within the other members of the Uchiha clan. Back in the Hokage Residence, Hiruzen informs Kakashi that an intruder is entering the village undetected and bypassing the barrier code: in an attempt to find out who it is, Hiruzen tasks Kakashi with exploring all barrier placements to find out more. Within the Uchiha district, a masked man appears to examine the rock, before exiting through a warp portal. In the Academy, Guy watches on at the young students, when Kakashi appears and asks him to come with him. The pair walk through the Uchiha district, where Kakashi notices a change in the atmosphere of the clan members, as if they did not want outsiders there. Elsewhere, Itachi reports to Danzō that the Uchiha intend on revolting. Later, Itachi asks the masked man for assistance and annihilates the clan. The Anbu, being too late for preventing the tragedy, instead are tasked with clearing up the field. At the sametime, Itachi gives a warning to Danzō not to harm his younger brother or confidential information would be leaked to every enemy nation. Before leaving, he asks for a secret meeting with Hiruzen, which talks about his forward intention and his brother's future. Hiruzen decides not to change the barrier code and permits Itachi to enter the village at any point if he is worried for Sasuke's wellbeing. Later, Kakashi is told of his change to become a teacher and that his time in the Anbu is now over.

Trivia

 * In one scene, there is an animation error that an Academy student is shown having an Uchiha crest in his back despite that scene happen after the incident.