My True Dream

is episode 369 of the Naruto: Shippūden anime.

Summary
With the Uchiha and the Senju clans forming an alliance, Madara and Hashirama's childhood dreams of a village where children were not sent to battle had come to fruition. The village itself would ally with the Land of Fire. Early on the two co-founders would stroll around the village looking after the well-being of the villagers. On the cliff where they once talked about their dream as children, both reminisce the moment and Hashirama stated that the Sarutobi and Shimura clans wish to join the village, with others to follow suit. Hashirama also stated that someone has to be chosen to represent the village as the Hokage and a name must be chosen. Madara suggested Konohagakure, a name which a depressed Hashirama states is too simplistic. The Senju leader later suggested that the chosen Hokage's face be carved onto the cliff face as a symbol of it watching over the village. At that moment Tobirama arrived and called his brother away, without even acknowledging Madara. Having heard of his elder brother's intentions to choose Madara as the Hokage, Tobirama argues that things are done democratically now and everyone, even the Uchiha, would not see Madara in the same light as Hashirama. With Madara having overheard the brothers' conversation, Hashirama agreed and he became the First Hokage. Later, Madara brought Hashirama to the Naka Shrine, as the first outsider to see the Uchiha stone tablet. With his Sharingan, Madara decrypted that while one interpretation is that two opposing forces can come together to create peace, another interpretation is that cooperation is a quiet method of conflict. Not understanding Madara's true agenda, Hashirama attempts to persuade him to not leave the village but is unsuccessful. Since then the village has prospered, and the other Great Nations as well as some of the smaller nations have copied the Leaf village system. But Madara returned to attack Konoha and destroy his previous dream. The conflict came to a head as Hashirama managed to strip the Susanoo armour off Kurama and bind the Tailed Beast from Madara's control.

Trivia

 * In this episode, the ninja academy already has its name. According to a timeline in the first fanbook however, the name was given to it some time after Hashirama's death.