Board Thread:Episode Discussions/@comment-8284722-20150108141809/@comment-1251315-20150108173212

Sarutobii2 wrote: Hanzo only appeared in a flashback in this episode when Tsunade was talking about Amegakure, but that doesn't necessary mean he's dead yet. Because Tsunade assumes that Hanzo still rules the people of Amegakure, she isn't aware (at that point) that Hanzo is already dead.

It can be assumed that Hanzo died either during Part 1, before the Nine-Tails attack or in the several years between Naruto's birth and the start of the series.

Nagato (through Pain) already ruled in Amegakure at the end of Part 1, through the scene of them convening, which would have already indicated that Hanzo is dead.