Genjutsu technique

Itachi using the genjutsu
Tsukuyomi on Kakashi.

Genjutsu (幻術; Literally meaning "Illusionary Techniques") are techniques that are employed in the same fashion as ninjutsu, requiring chakra and hand seals.

However, the primary difference between the two is that the effects of genjutsu are illusory; instead of attacking the victim's body, like taijutsu or ninjutsu, genjutsu techniques manipulate the flow of chakra in the victim's brain, thus causing a disruption in their senses. According to the Second Mizukage, genjutsu fittingly falls under the broad category of Yin Release.

This is often used to create false images or to cause pain from trauma (because the body is led to believe it is in pain); however, there are plenty of other uses depending on the situation. They are not used as often as ninjutsu because they don't physically harm the opponent, but several characters have made themselves well-known for their great prowess with genjutsu like Itachi Uchiha, Kurenai Yūhi, and Tayuya.

Genjutsu can also be used to manipulate others, similar to brainwashing by feeding the victim illusive suggestions, the primary example being Madara Uchiha controlling Yagura. However, there exists at least one genjutsu, Izanagi, that has the opposite effects to normal genjutsu, by changing reality to illusion and vice versa.

Genjutsu is created when a ninja extends their chakra flow through the cerebral nervous system of their opponent to control their mind's chakra, thereby affecting their five senses. Those with special abilities like the Uchiha clan's Sharingan or with high intelligence have an easier time executing and countering genjutsu, as attention to detail is key.

Those under the influence of genjutsu will either appear to be unconscious or continue to move around under the pretence of the genjutsu. The latter is very effective in battle as a genjutsu user can make themselves appear to be somewhere else and attack the victim from behind or change the environment to make the victim see a flat plain where there is a steep cliff.

Genjutsu attacks usually require a lot of skill, and, if performed incorrectly, will not work; even Jiraiya had trouble performing such techniques. Genjutsu is most often used by ninja with very precise chakra control and very high intelligence, the most notable being Itachi Uchiha and Kurenai Yūhi.

Because genjutsu affects activity throughout the Prosencephalon structure of the brain, humans, dogs and other species of mammal are therefore all affected by genjutsu; however, the kikaichū, like all insects, lack such a structure to their brains, and so do not even notice it: as Shino Aburame put it, insects are ruled almost solely by five powerful senses alone, which makes them immune to genjutsu and gives the Aburame clan an ability to detect it when nobody else can.

Shikamaru Nara states that among genjutsu the most dangerous are those that affect the opponent with sound allowing the user to stay out of sight. Tayuya is a great example of this sound-based, long-range type of combat.

source: [naruto.wikia.com]