Izanagi

The Izanagi is a genjutsu that is cast on the user instead of others and is the most powerful amongst this type of genjutsu.

Utilization
When activated, the caster removes the boundaries between reality and illusion within their personal space. To a degree this allows the user to control their state of existence, but it is normally active for only the briefest of moments. At the same time, in the anime, a highly skilled user of this ability can expand Izanagi's range beyond one's personal reality, able to affect a large area and the people within it during the technique's activation.

Although the target remains physically real while fighting, this technique is capable of turning any occurrence including injuries and even death inflicted upon them, as long as the technique is active, into mere "illusions." Whenever the user receives a fatal injury, he or she will automatically fade away before returning back to reality; physically real and unscathed. The process is explained to have initially involved the administration of imagination, and the spiritual energy which forms the basis of Yin chakra to create shape and form from nothingness. Then, through the application of vitality, and the physical energy which forms the basis of Yang chakra to breathe life into the prior form.

Izanagi can be used only by those with the genetic traits of the Sage of Six Paths. The Uchiha, descended from the Sage, are able to perform Izanagi with their Sharingan. Even with such an eye acting as a medium, gaining the power to temporarily control reality's flow as the user sees fit comes at a price; one has very limited reserves of time within a single eye for invoking this technique. This technique would normally be used for only the most dire of situations and for but a brief moment as after the Sharingan with which Izanagi was casted exceeds its limit, the said eye becomes powerless and is rendered blind permanently, with the rare exception that its sight and power can be restored to the said eye by further evolving it into a Rinnegan. For this reason the Uchiha labelled it a kinjutsu.

Danzō Shimura, in an effort to make practical use of the technique, had ten Sharingan embedded into his right arm. To use Izanagi to its full potential, users must also have the genetic traits of the Senju, who are also descended from the Sage. Partially for this reason Danzō had some of Hashirama Senju's DNA transplanted into his arm, which extended the time span of each Sharingan's Izanagi to a minute, allowing him to use the technique for up to ten minutes in total, with breaks in between to conserve time. However, because Danzō is not an Uchiha, his chakra levels drop substantially every time he activates this technique.

As with many Sharingan-based techniques, the Izanagi can be implanted into one's Sharingan to trigger the technique even after the user has already died; Madara demonstrated such usage after his actual death, as opposed to merely negating a mortal wound.

Mythological Background
Like the various techniques used with the Sharingan, this technique is named after a Shintō god. In this case, it is Izanagi, who, together with his sister and wife Izanami, created the islands and other deities of Japan.

One of the most famous stories about Izanagi tells the tale of how he goes into Yomi, the Japanese underworld, to retrieve Izanami after she died giving birth to the Shintō fire god, Kagutsuchi. In Yomi, he manages to get Izanami and they both try to leave, however, Izanagi was not supposed to look at her before they escape. Right before they reach the exit, Izanagi looks back and sees her in a decayed form. Frightened, Izanagi flees from Yomi and blocks the cave. Izanami curses Izanagi saying that she will kill 1000 people per day. In response, Izanagi says that 1500 people will be born each day. In another variation of the story, it is stated that Izanami told Izanagi to leave, however, he came back while she slept and lit a fire that revealed her decayed form, prompting him to escape out of fright, and barricade her inside with a giant boulder.

After his failed attempt to get Izanami, he washed himself in a stream. As he cleaned his left eye, Amaterasu was born, as he cleaned his right eye, Tsukuyomi was born, and as he cleaned his nose, Susanoo was born.

Trivia

 * The technique is rumored to be based on a technique the Sage of the Six Paths had, referred to as, which had the power to turn imagination into reality.
 * Obito, who also made use of Hashirama's DNA, noted that Danzō couldn't properly control Hashirama's DNA and because such, he couldn't perform a complete form of Izanagi. Showing evidence, Obito could maintain this technique much longer with a single eye than Danzō and perform it with no hand seals.
 * In Naruto Shippūden: Ultimate Ninja Storm Generations, Danzō uses this as part of his ultimate technique, letting his Wood Release go out of control, creating a tree that crushes both himself and the opponent, and activating Izanagi at the last moment to escape unharmed.
 * In the past, Uchiha clan members used this technique during an important battle that they had to win at all costs. However, they soon started to abuse the abilities granted by this technique and as such Izanami was created as a way to punish the abusers of Izanagi.
 * When Izanagi was first used by Danzō and Obito, the eyes that cast the technique closed their eyelids as indication of their blindness. However, later in the anime, when Itachi explained about Izanagi and Izanami to Sasuke, flashbacks show that the casting eye turns blank white. The manga later follows this depiction, shown when Madara used Izanagi to escape his death, his right eye turned blank white.
 * Despite Madara using Transcription Seal: Izanagi in the manga, he is not listed as a user of Izanagi in the fourth databook.