The Uchiha clan was one of the Four Noble clans of the Hidden Leaf Village. Members of this clan were famed and feared for their Sharingan, one of the three dojutsu of their universe. Originally rumored to be related to the Hyuga clan (famous for their Byakugan), it was later found all three of the the great Dojutsu stem from the same origin Lady Otsutsuki.
It's eventually revealed by Madara that the Uchiha are the descendants of Rikudou's oldest son and inherited his eyes and spiritual energy. Rikudou's older son formed a feud with Rikudou's younger son (whom inherited Rikudou's body and physical energy) when he was chosen by Rikudou to be his successor. Their conflict is said to be the reason behind the rivalry between the Uchiha and the Senju, the descendants of the younger brother.
Warring States Era
The Uchiha clan are the direct descendants of Indra Ohtsutsuki the elder son of the Sage of the Six Paths. Indra was gifted with his father's talent and visual prowess. He believed in power overall and was overlooked for succession this caused a rift between the brothers and their descendants - the Uchiha and Senju . This rift between the brothers created the Curse of Hatred that all Uchiha have inherited.
Before the start of the series is referred to as the warring clans era. This era had been going on for an unspecified amount of time. But believe it was from the beginning of the fighting between the two ancestors until the founding of the village system. The Uchiha were very proficient in war only being defeated or matched by the Senju clan.
One of the previous leaders of the clan was Tajima Uchiha the father of Madara Uchiha (who would grow up to become one of the most feared leaders). Tajima as a leader was efficient and brutal. His rivalry with Butsuma Senju coast both of them multiple children. During the warring states era Madara would meet Hashirama and form a friendship to look beyond the war torn era. However their fathers would stall that dream and set both of them on the path to become the strongest as well as the leaders of their respective clans.
Through fighting and sacrifice Madara and his brother Izuna would become the first to awaken the Mangekyō Sharingan, an advanced form of the Uchiha's legendary Sharingan. This aided in the transition of the clan to Madara's control. It was explained during the fight with Kabuto Yakushi that several members of the Uchiha clan began abusing the special ability of Mangekyo until order was restored with a counter measure. The warring era started to come to an end when members of the Uchiha clan became aware they were ultimately going to loose the war with the Senju and began defecting. All hostilities between them ended in a final brutal destructive where Hashirama and Madara went all out and leveled the battle ground. Afterwards Madara made a request of Hashirama and was appeased. This would be part of the foundation for the beginning of the village system that exist to current day.
Fall of the Uchiha
After the attack on the village by the Nine Tailed Fox demon, villagers began to suspect that an Uchiha had been the one behind the attack due to their ability to control to demon with their Sharingan. Because of this, the Clan was relocated to the outskirts of the village and placed under close scrutiny. This caused the Uchiha to distrust the government and see them as their enemies, and soon feelings of resentment towards the Senju-led village began to fester. Fugaku Uchiha, leader of the Konoha Military Police Force and father of Itachi and Sasuke, took control of the Clan and began to coordinate a coup. To further his plans, Fugaku placed Itachi in the Anbu Black Ops to act as his spy in the Hokage's office. Itachi didn't agree with his father's or the clan's intentions, and instead decided to become a double-agent, feeding the Hokage information just as he was feeding his father. The Third Hokage, Hiruzen Sarutobi, agreed with Itachi's outlook about the coup and wanted to find a peaceful solution to the problem.
It didn't take too long for other members of the Uchiha clan to notice Itachi's change in behavior, and before too long, Shisui Uchiha was ordered to keep an eye on him. Shisui, however, also wasn't keen to the idea of a coup and attempted to use his unique Sharingan ability to coerce the Uchiha leaders into ending this idea. His efforts weren't ignored, and soon Danzo Shimura tracked down Shisui and attacked him, taking his right eye and nearly killing him. Afraid that Danzo would find him again and gain his other eye, Shisui chose to take his own life but not before entrusting his remaining eye to Itachi. Not too soon after, Shisui's body was found by other Uchiha members, and since Itachi was the last person seen with him, Itachi became the prime suspect in what was an act of "murder". Acting cold towards the ninja who came to his door, Itachi attacked his fellow clansmen and was eventually broken up by his father, who had come to talk to the boy about his recent behavior. After a brief moment of rebellion, Itachi dropped to the ground and asked for forgiveness. Now back in the good graces of his father, Itachi was informed that the Uchiha were going to make their move soon.
Taking this information to the Hokage's office, the Third Hokage was placed with a terrible decision: let the coup happen, resulting in the death of hundreds and the weakening of the village, or make a preemptive strike and wipe out the whole Uchiha Clan in the night. Itachi took it upon himself to choose the latter option; he would attack and kill members of the clan in the night with the exception of his younger brother, Sasuke, who was too young and hadn't developed the hatred of the other Uchiha. Itachi went outside the village and sought out the one who had controlled Nine Tails in the attack, Madara Uchiha (actually Obito Uchiha in disguise) and recruited his help in the upcoming attack. As night time approached, Itachi snuck into the Clan's land and assassinated everyone of its members save for Sasuke, who happened to find and confront him. To spare him the truth, Itachi chose the role of the bad guy, telling Sasuke he had wanted to test his limits and that was why he had slaughtered his family. He then told him that Sasuke needed to search him out and kill him, and then told him about the secret of the Mangekyou Sharingan and how to obtain it. With this, the Uchiha Clan was no more and the village was spared.
Duel Between Brothers
Years later, Sasuke gathered his own team after training under the tutelage of Orochimaru and tracked down Itachi with the intention of finally killing him. As his team neared an Uchiha hideout, they came into contact with Itachi's Akatsuki partner, Kisame Hoshigake, who informs then that only Sasuke is allowed from this point onward and that the rest of the team needs to wait with him. As Sasuke made his way to the hideout, he found Itachi sitting on a throne and told him that his eyes were different than before and that he would use them to defeat his older brother's Mangekyou Sharingan. Sasuke then attacks Itachi and asks him who the remaining survivor of the Uchiha Clan is, learning of this after reading the secret Uchiha tablet detailing such. As the two exchange genjutsu, Itachi tells Sasuke about the Uchiha's past, detailing the rise of Madara Uchiha, the first Mangekyou Sharingan users, the eventual attack on Konoha with the Nine Tailed Fox, and lastly with the fact that only two brothers can provide each other "new light", meaning Itachi intended to steal Sasuke's Sharingan to ensure that his own overused Mangekyou Sharingan wouldn't lose its light and he wouldn't become blind.
As Sasuke was caught in Itachi's Tsukuyomi technique, he managed to break out of it with his own Sharingan, shocking the older brother because he believed only another Mangekyou Sharingan could do such a thing. As the two continued to fight, the battle headed outside as Sasuke launched two Fireball jutsus that changed the atmosphere outside and created storm clouds. As both brothers were out of chakra and on their last legs, Sasuke enacted his plan: using the clouds he created with his fire jutsu, he took control of and empowered a bolt of lightning with his chakra and launched it towards Itachi, destroying the hideout and mountain under it and apparently securing the victory in his name.
The attack hadn't killed Itachi, though, as he activated his ace in the hole: Susanoo. An enraged Sasuke intended to charge back at Itachi, but since he was so low on chakra, his Curse Mark overpowered him and eight giant snakes sprouted out of his shoulder, revealing Orochimaru from one of them. Although weakened and sick from an earlier ailment, Itachi did battle with Orochimaru's snakes, revealing two spirit weapons he had in his possession: the Totsuka Blade and Yata Mirror, two weapons that could seal a target in a world of genjutsu dreams when pierced and a shield that could deflect anything. One Orochimaru and his snakes were sealed, Sasuke was dead to rights at Itachi's feet, but instead of finishing him off, Itachi placed his fingers on Sasuke's forehead, traced a line down his face, and then collapsed, dead at his feet.
After the fight, Tobi arrived at the scene and took Sasuke away to heal his injuries, as well as extracted Itachi's eyes for later use. When Sasuke awoke, Tobi attempted to tell him about himself and the truth about Itachi, but when he made eye contact with Sasuke, Itachi's ability Amaterasu came to life and caught Tobi's shoulder on fire. Both Tobi and Sasuke seem surprised by this revelation, and Tobi revealed that just before his death, Itachi had transferred the power to Sasuke's eye. Tobi later revealed the truth to Sasuke about the night his family was murdered, Itachi's true intentions, his true love for the villahe, and his love for Sasuke. Sasuke eventually chooses to abandon Itachi's ideal of protecting the village in order to seek revenge on the elders of Konoha for putting Itachi in that position in the first place. Because of this, Sasuke becomes a villain and joins with Akatsuki, hunting down jinchuuriki, invading the Kage Summit in the Land of Iron, killing it's Samurai, and finally killing Danzo in single combat.
Sasuke would eventually summon back Orochimaru and order him to resurrect the original four Hokage in an attempt to learn whether or not what he was told about Itachi was the truth. After hearing their stories, Sasuke chooses to now defend Konoha and become it's Hokage, intending to rewrite the history of the village and remake it in his image. He would work together with the Allied Shinobi Forces in order to defeat the Akatsuki, Obito, Madara, and then finally the originator of chakra, Kaguya Ohtsutsuki. With new found powers allocated to him and Naruto by the spirit of the Sage of Six Paths, Sasuke and Naruto were able to seal Kaguya and release the nine Tailed Beasts.
After the defeat of Kaguya, Sasuke chose to use his new powers and trap all of the Tailed Beasts in his Chibaku Tensei technique, intending to kill them as well as the other Kage. When confronted about this by Naruto, Sasuke reveals that he intends to remake the shinobi world by getting rid off the old order, making himself the "enemy" to keep the shinobi world united against a threat. Although he had chose to help the ninja world, Sasuke still harbored strong feelings for the mistreatment the Uchiha clan received years earlier, and this was his driving force behind his "revolution". Knowing Naruto was the only one in the world with the power to stop him, he brought his old friend to the Valley of the End to finish things once and for all and see who's conviction was stronger. After a brutal duel, the valley had been devastated and both young men lay on the ground, with Sasuke having lost his left arm from their jutsu clash.
Seeing the error of his ways, Sasuke chose to end his revolution and accept the consequences of his past actions, but was acquitted of his crimes by the now Hokage Kakashi Hatake. Sasuke didn't make his home in the village, but instead chose to travel the world to atone and think about his villainous acts, as well as study the origins of Kaguya.
Years later, Sasuke married his old teammate Sakura Haruno and the two had a child named Sarada Uchiha. During this time, the Uchiha clan name has been cleansed, and Sasuke is seen as a hero to the village and the only person able to contend with the Seventh Hokage, Naruto Uzumaki. The Uchiha's are still seen as the top clan in Konoha, as Naruto's son Boruto Uzumaki claims that its no surprise that Sasuke is very skilled at shurikenjutsu because he's an Uchiha.
Known as the Mirror Wheel Eye or The Eye That Reflects. The Sharingan is the trade mark of the Uchiha clan, something that is inseparable from them. The Sharingan is activated either from being in a living threatening separation or when under extreme emotional stress. With this eye power, users have the ability to see through illusions, copy and mimic ninjutsu and taijutsu, and place people under Genjutsu with a glance.
The Uchiha's most powerful ability, however, is the Mangekyou Sharingan. It is said that you must past the test of killing your best friend or someone very close to you to obtain it. The one bad thing is once if it is overused, the user starts to go blind. Madara found this out firsthand. Madara solved this problem, however, when his younger brother gave him his eyes. This not only gave Madara his sight back, but gave him a more powerful Mangekyou Sharingan, called the Eternal Mangekyou Sharingan, that would never lose its sight. This began a long dark secret of those who are born Uchiha, killing their friends to obtain the Mangekyou and then killing their siblings to make the Mangekyou permanent.