Hyuuga clan is one of the oldest and renamed clans in Konoha. They have been there ever since the establishment of the hidden village with the lead of Shondaime or the first hokage. Many years ago there was a girl from Hyuuga clan who fell in love with an outsider. She decided to marry herself to the young man since the strong protests from her own clan. But this man was no ordinary human. In fact, this man was not a human at all. His name was Sojobo. He was the King of the mighty Tengu.
There are two types of tengus, Karasu tengu (a crow-like creature with beak and wings) and Konoha tengu (also known as Yamabushi tengu). Sojobo was a Konoha tengu. He had long nose and white hair with a pair of black wings on his back. As the King of Tengu, Sojobo possessed some very mystical powers. He carried a fan made of Fatsia leaf that could create a storm (therefore people sometimes call this type of leaf as Tengu no Uchiwa or Tengu's fan). He could teleport himself or any other things from one place to another. He could also communicate with people telepathically or even invade their minds and drive them to madness. Beside, Sojobo was also known for his shapeshifting ability. He sometimes transformed himself into human to interact with people.
Anyway, this girl from Hyuuga was in love with Sojobo taking the human form without knowing his true identity. She married him shortly after they met each other. A year or two later, she was pregnant and brave birth to their first son. Sojobo named this son Uchiha, Uchiha Madara, after Uchiwa which means fan. And of course as we know, fan also later became the symbol of this new clan.
Everything was good. Uchiha Madara soon grew up to become a very powerful shinobi. He not only inherited the Kekkei Genkai from his mother but with the Tengu blood inside him the Byakugan had evolved into an even more dreadful form-the Sharingan! This new bloodline had 2 levels: Normal Sharingan and Mangekyou Sharingan. Like his tengu father, Madara possessed some incredible magical powers. He was able to use telepathy to invade people's minds, or even teleport himself across a short distance. When he turned on the Mangekyou Sharingan (he had the normal Sharingan on 24/7 just like his Hyuuga kin), the eyes would further intensify his powers and bring him even closer to a tengu form. He had developed 3 jutsus under this state, namely Tsukiyomi (to control people's minds and drive them insane), Amaterasu (the black divine flame) * and Susanoo (the ultimate fighting power and defense).
Because of his bravery and almost unparallel powers, Madara soon became a hero in his people's eyes since his young age. He became very close friends with Shodaime and together they took up the responsibility to protect the Konoha village they established. Madara founded the first police force in the Konoha and swore to protect his people with his life.
But good things do not last long. As Madara was about to reach his adulthood, Sojobo began to reveal his true intention. Sojobo did not marry the girl from Hyuuga out of love. He was only looking for a perfect body, a container (probably to achieve greater powers), and he figured the best way was to create one with his own blood. He was planning on taking over Madara's body once he reached his adulthood. It did not take Uchiha Madara long to find out this appalling truth. He felt a mixture of shock and anger. He felt he was being used but he was not going to give in such easily, at least not without a fight. But Madara knew only too well that no matter how strong he was he stood no chance against the King of Tengu. Out of despair he thought for the legendary Bijuu-Kyuubi (the God of Fire).
Kyuubi was very impressed by Madara's abilities. A secret pact was made and Kyuubi agreed to lend his power and chakra to Uchiha Madara. Soon Madara mastered the katon and he could even cast a dark fire that would burn for 7 days and 7 nights after performing the Amaterasu. But even with these newly gained powers and a huge supply of chakra from the Kyuubi, Uchiha Madara was only able to beat his demon father by a hair's breadth. He could not finish him once and for all but only managed to seal him up. However, the seal he used was a very special one. To break the seal it requires the Kyuubi's chakra and also not one but 3 Uchiha members who can wield the Mangekyou Sharingan. Each MS user has to cast a different MS jutsu at the same time and when the 3 jutsus – Tsukiyomi, Amaterasu and Susanoo – combine, the great evil will be unleashed. It's a tall order and Madara thought it would be enough to seal up the demon for eternity. But what Madara did not expect was that this seal itself would bring a bloody massacre upon his own clan many decades later …
Here I will derail a bit and talk about the relationship between Shodaime and Madara. When Shodai found out about the secret pact between Madara and Kyuubi he was enraged. He thought it was hunger for greater power that led his best friend to the Kyuubi. Madara did not explain to him either because he did not want anyone to know he was a half-demon. Conflicts began to appear between the two who were once close to each other. The intension hostility is ultimately resolved in a great battle at the Valley of the End.
Alright, now back to the main story. Many years had come into past since Sojobo was sealed. The tengu's blood in Uchiha clan was now no longer as pure as it once was. It was gradually being "diluted" by constant marriages with non-Uchihas over the generations. Now even the Normal Sharingan was possessed by only the elite few among Uchihas, let alone the Mangekyou Sharingan. But the dark history of the clan was anything but forgotten. A tengu shrine was built underneath the Nakano temple by some of the early Uchihas to keep all the secrets of the clan inside (including killing your loved one to gain MS which was discovered by some later Uchiha). Once an Uchiha member was thought to be reliable enough he would be informed about the secret meeting place and it would then become his life-long obligation to keep these secrets from outsiders. The Uchihas considered this dark history as an unspeakable shame and swore to protect the glory and dignity of their clan with their lives no matter what happened.
20 years ago, a new member was born into an Uchiha family. He soon proved himself to be a prodigy, even by the high standards of the Uchiha. He graduated at the top of his class at age 7, mastered the Sharingan at 8, became a Chunin at 10 and an ANBU squad leader at 13. His name was Uchiha Itachi. As Itachi was selected to become an ANBU his father Fugaku felt that it was the right time to tell him everything. Itachi learned about the Mangekyou Sharingan and the origin of his clan from his father. Deep inside his mind, an evil shadow began to take shape …
One night, when all men of Uchiha were invited to gather at the secret meeting place two of them were absent. Itachi lured his best friend Uchiha Shisui to the Nakano river and started his horrendous plan. He accused and killed Uchiha Shisui on that night and obtained the accursed eye powers-Mangekyou Sharingan from the death of his friend. The next day when people found Uchiha Shisui's body they also found a suicide note grabbed in his hand. But of course this note was not really written by Shisui. Itachi forged his handwriting with the Sharingan to make it look like a suicide. What was written on the note is important because it reflects Itachi's feeling at that time.
Always living with fear-fear that people may find out the secrets of their clan, fear that people may know Uchihas are actually descendants of demon-they all swore to take the secrets with them to the graveyard. This was the miserable life of every Uchiha member. Itachi was tired of all these. He could see no future for his clan. He did not understand why his people felt washed out of their own past. He did not understand why his people did not see their superiority to the normal human beings. He did not understand why his people decided to seal up such a great power and not to use it. Itachi had lost all his hope for the Uchiha clan because of the pathetic "path" they had chosen.
From the moment Itachi heard about the origin of his clan he felt a weird sense of pleasure and superiority. He felt he was somehow more special than the others. Then his sick and twisted mind had gone even further. He wanted to set the tengu free. He was willing to sacrifice his body in exchange for probably the strongest power the world had ever seen. He was ready to offer his body to the Tengu King.
Soon Itachi had put his thoughts into action. When he learned about the Akatsuki's plan to capture the Bijuus he decided to join them. He needed their help to get the Kyuubi's chakra. But that's not all. Itachi still had to find another 2 MS users. After awhile, he came across a second MS user who agreed to help him carry out his plan. Now all he needed was the third and last MS user.
Itachi knew his clan members would never kill their loved ones to get MS. He despised them. They were a bunch of cows, useless … oh wait, Itachi suddenly came up with an idea-he could still use them to achieve his purpose. He could use them to make his little brother the third MS user …
On a full-moon night, the ancient blood inside Itachi finally awakened and he had completely lost his mind. He killed his entire clan including his parents. Then he waited for his little brother Sasuke to come home. He wanted him to know he was the one who did it. He used Tsukiyomi on his brother to make sure such a tragic picture would stay with him for the rest of his life. He wanted Sasuke to hate him. He wanted Sasuke to hate him enough to kill his own friend and activate the Mangekyou Sharingan. He told him about the secret meeting place so that he would find out everything. He wanted Sasuke to take the path he had paved for him-the path of an avenger.