Once upon a time, the Nine-Tailed Demon Fox devastated the shinobi village of Konohagakure, and was only stopped when the village's leader, the Fourth Hokage, gave up his life to seal it within the body of an infant. Twelve years later, a young orphan boy named Naruto Uzumaki regularly pulls pranks and is constantly causing trouble around the village. The villagers dislike him for it, but having no parents or friends, Naruto craves even negative attention.
At the final exam, Naruto is unable to use the Clone Technique and Iruka subsequently fails him. Afterwards, a more sympathetic instructor, Mizuki, tells him an apparent secret, while the Third Hokage talks to Iruka about how Iruka also lost his parents in the Nine-Tails attack, and that he relates to Naruto that way.
That night, Naruto manages to steal the Scroll of Seals, believing that if he can learn one of its secret techniques, he will finally be allowed to continue on to the ranks of the ninja. After successfully stealing the scroll, a search is placed on Naruto, and he is caught by Iruka after only learning one technique. Realising that Naruto has been tricked, Iruka protects him from Mizuki's attack, Mizuki planning to take the scroll for himself.
To sway Naruto to his side, Mizuki tells Naruto the truth: Naruto is the boy that had the Nine-Tails sealed inside of him, and that a decree was placed preventing anyone from talking about it, barring Naruto from learning about it. He goes on to explain that the villagers hate him for the monster he contains and that Iruka, his parents having been killed by the Nine-Tails, must hate him the most. Mizuki attempts to kill Naruto, but Iruka blocks the attack, revealing his own past to Naruto. Overwhelmed, Naruto flees into the woods.
Iruka and Mizuki confront each other while Naruto listens behind a tree. Mizuki berates Iruka, claiming Naruto will use the scroll to get revenge. Iruka says this is not the case as he does not blame Naruto for the beast's actions, before acknowledging him as his friend. Having finally made a friend, Naruto reveals himself and uses his newly mastered Multiple Shadow Clone Technique to defeat Mizuki, while the Third Hokage calls off the search. Amazed by the complicated technique Naruto has learned, Iruka officially makes Naruto a ninja in training and puts faith in him becoming Hokage.