After the end of the Third Great Ninja War, the Leaf Village is divided over who should become the next Hokage. Minato Namikaze is soon appointed as the Fourth Hokage, much to the annoyance of Danzo and Orochimaru. Meanwhile, Kakashi is haunted by the deaths of Obito and Rin, causing him to lose focus on his missions.
Kakashi becomes part of the ANBU Black Ops, an elite team of shinobi who are under the direct command of the Fourth Hokage, Minato Namikaze. Although he is highly regarded by his peers, Kakashi's ruthless way of killing the enemy has earned him the nickname "Cold-blooded Kakashi."
At the Foundation, Kakashi meets a boy who uses Wood Style, a jutsu that only First Hokage Hashirama was capable of using. Kakashi goes to Third Hokage Hiruzen's library to seek answers and discovers records regarding Hashirama's cells.
Orochimaru is forced to flee the Hidden Leaf after Third Hokage Hiruzen exposes his illegal experiments. Danzo, fearing that Orochimaru's capture would lead to the exposure of his own involvement in the experiments, sends out one of his men to help the rogue ninja.
While pursuing Orochimaru, Kakashi wanders into a village inhabited by the Iburi Clan, a group of people with the unique ability to turn into smoke. Kakashi is soon captured and learns that the villagers all serve under Orochimaru.
Yukimi leaves the village to see the outside world, taking "Tenzo" with her. Kakashi tries to convince the two to return so that he can set a trap to capture Orochimaru, who is after Yukimi's blood. But Yamato, who has grown attached to Yukimi, abandons his original mission to protect his friend.
Danzo orders Tenzo to kill Kakashi and take his Sharingan. Reluctant at first, Tenzo decides to carry out his orders after learning that the Leaf Shinobi has come to be known as "Kakashi the Friend Killer."
After being saved by the target he was ordered to kill, Tenzo realizes that the man known as "Kakashi the Friend Killer" is someone who values the lives of his comrades more than anyone. No longer wishing to kill Kakashi, Tenzo abandons the mission and returns to the Leaf Village, fully aware that his actions will stir up Danzo's anger.
Itachi Uchiha is inducted into Kakashi's unit as the youngest member of the ANBU Black Ops. Itachi's father, Fugaku, is pleased, thinking this will grant the Uchiha access to exclusive, top-secret Leaf intel. But Danzo, who wants intel on the Uchiha, orders Itachi to betray his family and clan by acting as a double agent.
Following the aftermath of the Nine-Tails incident, many on the Leaf Council voice suspicions that the Uchiha Clan were behind this tragedy. The Uchiha are then placed under 24-hour surveillance by the ANBU, which causes further tensions to arise.
Kakashi visits the Uchiha District and notices that the community seems more antisocial than the last time he visited. Meanwhile Itachi finds concrete evidence regarding the Uchiha Clan's coup against the Leaf. The fateful moment is fast approaching…
Hiruzen relieves Kakashi of his ANBU duties and assigns him a new position as a Jonin Leader. Reflecting on his past mistakes, Kakashi decides to use the same test that Minato once used to measure one's teamwork.
Hiruzen assigns Kakashi to be in charge of Naruto, Sasuke, and Sakura, three genin that bear a striking resemblance to the former Team Minato.