Danzo (ダンゾウ, Danzō) is a Konoha elder, one of the oldest villagers in Konoha. He is also in charge of the ANBU faction named the Foundation. He is later appointed as the acting Sixth Hokage (六代目火影, Rokudaime Hokage) after Pain's invasion.
Background
In the past, he competed with Hiruzen Sarutobi for the position of Third Hokage. His desire for obtaining the said status was so great, that he even at one time secretly aligned himself with Hanzō of the Rain Village. He created the ANBU faction named The Foundation and acted as its head. He is now disabled but still wields enormous political clout. However, it is known that during the Second Ninja world war he was still an active shinobi, although he had already needed a covering for his eye. Nagato states that Danzo had allied with Hanzō, in hopes of gaining his aid in becoming Hokage, which implies that Danzo's treachery began years before.
In the past, he competed with Hiruzen Sarutobi for the position of Third Hokage. His desire for obtaining the said status was so great, that he even at one time secretly aligned himself with Hanzō of the Rain Village. He created the ANBU faction named The Foundation and acted as its head. He is now disabled but still wields enormous political clout. However, it is known that during the Second Ninja world war he was still an active shinobi, although he had already needed a covering for his eye. Nagato states that Danzo had allied with Hanzō, in hopes of gaining his aid in becoming Hokage, which implies that Danzo's treachery began years before.
He even took part in the dealings with the Uchiha clan, when Konoha learned that they were planning a take over of the village. He planted Itachi Uchiha as a spy in his own clan, and it is assumed that he ordered the annihilation of the clan in order to avoid a civil war that would lead to the destruction of the village. When Itachi refused to kill Sasuke Uchiha as well, Itachi threatened to go public with the assassinations, as well as the village's secrets and weaknesses, if Danzo ever harmed Sasuke.
Personality
Danzo is a blunt tactician, which is demonstrated by his preference of eliminating threats and ordering them executed instead of using negotiation. He is also willing to use anyone, even his enemies, to achieve his goals. The most prominent example of this is Akatsuki, whom he uses as a way to weaken Konoha so as to overthrow Tsunade.
Although not an official part in the affairs of Konoha, he still maintains an eye on everything. He will immediately act if he sees anything that might look like a threat to Konoha with or without the consent of the Hokage. His fellow elders, Homura Mitokado and Koharu Utatane, hold him in high regard and have often taken his advice when dealing with the politics of the village.
Even though he addresses Tsunade politely, he does not approve of her. This is mainly because she is the granddaughter of Hashirama Senju, the First Hokage, and like Hiruzen, has inherited the same teachings and philosophy as him, something that Danzo opposes.
Despite showing public care and loyalty to Konohagakure, Danzo in truth wanted to overthrow Tsunade and become Hokage himself, believing that he alone knows what is best for the village's future. His desire to become Hokage was so great, he was willing to align himself with Hanzō of the Rain village, as well as allow Akatsuki to attack the village and wait until the moment is right to make his move. This shows Danzo is both extremely prideful and conniving.
Despite the Foundation being loyal to him, Danzo was still cautious and had Cursed Seals placed on their tongues. This shows that Danzo is both very secretive and disregards the moralities towards his own subordinates.
Danzo's plan is to manipulate Konoha and the shadows without people knowing it's him so no one knows what he is doing.
Sai and Sasuke arc
Danzo assigns Sai to Team 7 as a replacement for Sasuke Uchiha. Because of this, Tsunade assigns Yamato to the team as well in order to keep an eye on Sai in case Danzo has other plans for him. During a mission Sai makes contact with Orochimaru on Danzo's behalf, proposing that the two join sides in order to destroy Konoha. Although believing this to be the evidence needed to prove Danzo works against the village, Yamato later discovers that Sai's actions are a ruse to get close to and kill Sasuke. When Sai proves unsuccessful and displays attachment to Team 7, Danzo merely states that "emotion brings hatred, and hatred brings war."
Fire Temple arc
Danzo is later seen followed by ANBU agents, on Tsunade's orders, when he is to be briefed by Tatsuji, a spy of his, from Amegakure. He and Tatsuji are apprehended and questioned by Tsunade, though the interrogation is interrupted by Sora, who was found eavesdropping.
Invasion of Pain arc
When Pain begins his invasion of Konoha and Tsunade asks the toad Kosuke to retrieve Naruto Uzumaki, Danzo kills Kosuke to keep the Nine-Tailed Demon Fox "out of the way". Danzo is later seen with the members of The Foundation, instructing them not to help with the defense of Konoha in the hopes that Pain's actions will give him the opportunity to overthrow Tsunade.
Following the invasion, leaders of the Land of Fire and Konoha gathered for an emergency meeting. Danzo convinces the daimyo of the Land of Fire that each of the previous Hokages had passed on a peaceful ideology to their students. This in turn made them too soft on military issues, resulting in Konoha's current crisis. The village now needed a strong and firm leader who would enforce the laws of shinobi and bring order to the world. He states that he alone is fit to be Hokage. After a short time to consider, the Daimyo agree to appoint him as the Sixth Hokage. Upon reading the letter from the Raikage delivered by Samui, Danzo's first action as Hokage is labeling Sasuke as a missing-nin to be killed by the village.
The Summit of the Five Kage arc
Even though Danzo has been appointed as Hokage by the daimyo, he still requires the votes of the Jonin to officially acquire the position. So, as acting Hokage, Danzo ordered his subordinate, Sai, to keep an eye on Naruto. Sai asked him what his plans would be. Danzo replied that Naruto is now a hero to Konoha and he is more trusted by the citizens than himself. Naruto could sway the vote for Hokage out of Danzo's favor, so Danzo does not plan on making any moves against him. However, Naruto is still the container for the Nine-Tailed Demon Fox, and eyes must be kept on him at all times. Danzo added that he would not be as weak as Tsunade.
Before heading off to the Kage summit, when a Foundation member suggested assassinating Anko Mitarashi, Danzo belayed that. He instead ordered them to find Kabuto Yakushi before Anko does since Kabuto may know of his relationship with Orochimaru. He also indicated that the data Kabuto has on Orochimaru's experiments may be useful for restoring his arm and eye.
After leaving for the Kage Summit, Danzo is being attacked by at eight shinobi from the Wood Country's Hannya clan. He orders his bodyguards to stand down and will take down the assailants himself, and he reveals the Sharingan under the bandages of his right eye. After killing the eight enemies, he saw seventeen more hidden in the woods and killed them. It is after he kills the ninja assassins, he reveals his plot for the world and he believes that this philosphy and the Kage Summit going well will gain him the permanent seat of Hokage.
Abilities
Sai stated that Danzo placed Cursed Seals on every Foundation member. The seal prevents them from revealing any information on the Foundation or Danzo. The seal activates when the the wearer speaks about anything relating to Danzo or the Foundation which will paralyze and mute the member in question completely.
Danzo has a Sharingan for his right eye, which he keeps hidden under the bandages. It is apparently damaged, as the sclera is not white. Despite this, he is very adapted to using it, detecting seventeen assassins hidden inside a forest.
Danzo seems to have some Wind Release technique that allows him to slash through his assailants after making the necessary hand seals, then spinning around while exhaling. He is also quite skilled with a sword, killing many more assailants with one.