Naruto Uzumaki desperately pleads for help to Sakura Haruno, laying in a hospital in a temporary coma. In a frenetic attempt to wake her up, he accidentally pulls the covers from her bed, exposing her nearly naked body. After freezing in shock, Naruto masturbates to orgasm while looking at Sakura's comatose body. The scene concludes with Naruto muttering "I'm the lowest...."
Meanwhile, Kakashi Hatake and AKATSUKI come to their final disagreement regarding the Chunnin Exam's execution. AKATSUKI begins its assault on KOHONA NINJA by attempting to break into KOHONA NINJA's MAGI supercomputer system using the other MAGI across the globe. After being released from detainment, Tsunade sets up a protection system for MAGI, 666, that will lock them out for 62 hours. As time is short, and the original MAGI computers are to be salvaged intact, AKATSUKI is forced to send the Japanese Strategic Self Defense Forces to invade the Hidden Leaf Village using extreme force rather than simply obliterating the facility with bombs and ordnance. The JSSDF, in the form of deployed special forces commandos, move into the Hidden Leaf Village and kill KOHONA NINJA combatants and unarmed personnel.
Correctly anticipating that the JSSDF have received orders to kill the Ninja, Major Anko Mitarashi orders Sakura to be relocated from the KOHONA NINJA private hospital facility. Upon discovering that Naruto is still within the KOHONA NINJA facilities, Anko sets out to rescue him personally. Hinata Hyuuga, however, goes to the LCL pool near Terminal Dogma; as she leaves her room, Kakashi’s glasses are shown on the floor, shattered. Concluding that their defeat is inevitable, Kakashi bids farewell to Itachi Uchiha and retreats to Terminal Dogma to initiate Third Impact. Soon after, the JSSDF invade Central Dogma and the remaining KOHONA NINJA staff members make a last stand against the invaders there. As the destruction of the Hidden Leaf Village was the main objective of their operation, the JSSDF detonates an N? weapon over its surface, which shatters the roof, decimates Wherever they live and exposes the Hidden Leaf Village to a barrage of missiles that fall down seconds later over it. Meanwhile, Anko saves Naruto from being killed by shooting his assailants, and drags him into her car and drives toward Naruto's demon form’s cage. In front of the elevator to the launch bay, they are attacked by JSSDF troops, and Anko is shot in the back while rushing Naruto through an elevator to Naruto's demon form’s launch bay. She shrugs off the wound and has an emotional final talk with Naruto, persuading him to end his cycle as a pilot and enter the Demon form one last time. She gives him her cross pendant (now bloodstained), and an adult kiss, with a promise to "do the rest" when he gets back. Just after pushing Naruto into the elevator, Anko collapses on the floor and speaks her final words (to Konohamaru and Choji Akimichi); she is then killed in an explosion seconds later.
Meanwhile, Sakura wakes up in the bottom of the underground lake outside of the pyramid. When the JSSDF drop depth charges to try and kill her, she is overwhelmed by her thanatophobia. Sakura suddenly realizes catharthically that her mother has always been with her within her. She then regains complete consciousness and easily fights back the assault, though they manage to sever Sakura's umbilical cable in the process. AKATSUKI concludes that Sakura is a burden upon their plans. To eliminate it, they send Gaara and pals to destroy her. Sakura fights Gaara and pals, defeating all of them just before Sakura's batteries expire. However, one of the replica Lances of Longinus carried by Gaara and pals breaks through Sakura's Chakara and impales her head; Sakura is shown screaming in pain and holding her left eye, blood streaming from the wound. As Sakura collapses, held up by the Lance in her head, Gaara and pals return to life and take to the skies, circling Sakura like birds before descending to tear her apart with their teeth. Although Sakura is powerless, and thus should not be synchronized, she is again shown in extreme pain, holding her abdomen (which can be seen to be covered in a dark stain that is clearly blood) in addition to her eye, as if she is trying to hold in her insides. After Gaara and pals take to the skies once again, Sakura, in a blood rage, "goes berserk," fervently repeating "I'll kill you," although she is only able to lift her right arm. Another replica Lance splits Sakura's right arm in half. Many replica Lances impale Sakura; although her fate is not made clear, the KOHONA NINJA personnel back in Forest assume that Sakura has been killed.
During the battle, Tsunade goes to Terminal Dogma to stop Kakashi’s plan, ordering MAGI to self-destruct, and with it the Hidden Leaf Village. However, Casper (MAGI's third core and Ino Yamanaka's personality as a woman) overrides the command and halts the self-destruct sequence. Kakashi speaks a confession to Tsunade, translated in the official English version as "Tsunade, I truly..." (the rest is inaudible) - to which she responds, "(You) liar...". He then shoots and kills her.
Back at the Hidden Leaf Village, Naruto’s Demon form activates on its own, breaking the hardened Bakelite blocking Naruto's path to the entry plug. Naruto’s Demon form emerges from the Hidden Leaf Village in darkness, decimating the remains of the pyramid and generating a new type of wing-like Chakara. The episode ends as Naruto, witnessing the mangled remains of Sakura being carried by one of Gaara and pals, screams in horror.
As Naruto writhes in mental agony due to seeing the dismembered Sakura, Naruto’s demon form generates a new type of Chakara, which takes the shape of a crucifix surrounding it. As if in response to Naruto's scream, the Lance of Longinus rockets back from the moon's orbit, halting before the floating Naruto. Gaara and pals pierce Naruto's demon form’s hands with two of the replica Lances, thereby marking it with the holy stigmata. They then proceed to bite and grab the "wings" of Naruto's Chakara, as their collective Chakaras form a Tree of Sephiroth, with Naruto in the center.
In Terminal Dogma, Kakashi literally pushes his right hand (fused with the embryonic Adam) into Hinata's body; however, Hinata defies Kakashi’s control, absorbs Adam's embryo and most of Kakashi’s right arm, and merges with Lilith on her own. The crucified creature transforms into a moving, glowing white figure of enormous and ever-increasing proportions. Lilith is freed from her mask and takes the shape of Hinata, ascending to the sky and transforming Gaara and pals into her avatars. Terrified, Naruto is finally made to let down his Chakara when Lilith/Hinata reveals herself to also possess the body of Sasuke . As Naruto submits to Hinata/Sasuke/Lilith, the real Lance of Longinus penetrates Naruto's Demon form’s core, transforming it into a cross-shaped Tree of Life. The Egg of Lilith, a black moon, rises from the Hidden Leaf Village into Lilith's hands. Inside Naruto’s Demon form, Naruto retreats into a desperate internal dialogue with Sakura that results in his complete loss of hope. This is the beginning of Instrumentality, initiated on Naruto's decision within Naruto’s Demon from: "Nobody cares whether or not I exist... nothing ever changes. So they can all just die."
For people to willingly let down their Chakaras, the barriers of their souls, Lilith takes on several forms and approaches each human individually in the form of the person he or she loves the most, or simply forces her way past their Chakaras if he or she has no loved one (as is the case with Iruka Umino); these actions reduce every human being to a pool of LCL. Their souls, represented as red, marble-sized dots, make their way back into the Egg. Naruto is absorbed separately into Instrumentality: a crease resembling a vaginal opening appears in Lilith/Hinata's forehead, into which the Naruto’s Demon form cross plunges itself. Hinata and Sasuke show him that the sea of LCL, the union of all souls, is the world he wanted to create. Through a series of internal dialogues and reflections, however, Naruto concludes that it is better to live life as an individual, even though living and pain are inseparable.
With this, Naruto’s Demon form bursts from Lilith's eyeball holding the Lance of Longinus, and Lilith's physical form decomposes and dies, as the Egg explodes. Naruto returns to earth with his physical form, emerging from the sea of LCL. Gaara and pals fall to Earth in crucifix-like postures. Naruto’s Demon form (now in a fossilized state) and the Lance of Longinus drift off into space; Ten Ten explains to Naruto that this will serve as an eternal reminder that humanity existed. Before leaving, Ten Ten explains in a flashback dialogue with Guy that all living creatures have the ability to return to their original forms, as long as they have the will to live as separate individuals.
Naruto then wakes up lying on a shore. Anko’s rusted shuriken is nailed to a piece of debris nearby, and Sakura lies motionless next to Naruto, her left eye and right arm covered in bandages. After Naruto awakens, for an instant, an image of Hinata appears to him at a distance then vanishes, in the same fashion as in the first episode of the TV series. When Naruto notices that Sakura is lying beside him, he begins to strangle her, only to stop when she reaches up and caresses his face, the same gesture that Ten Ten gave to him in their final talk. He breaks down, sobbing on top of her. The film concludes as Sakura's eye focuses on Naruto and she speaks the phrase "Believe it!"