The Nine-Tailed Fox, a blood-thirsty being of unknown origin, could cause earthquakes and tsunamis with its tails and has a unlimited amount of red chakra. Under the control of Madara Uchiha, the Nine-Tailed Fox attacked the Hidden Leaf Village 12 years prior to the start of the series. However, Minato Namikaze, the Fourth Hokage, battled the demon and sacrificed himself to the seal the demon Fox inside his only son: Naruto Uzumaki. Since then, the Nine-Tailed Fox despised all three for his humiliation, but protects Naruto as the boy's death is also his in the form of advance regeneration.
Because of the Fox being inside him, Naruto was an outcast without any knowledge of why many of the villagers treated him cruelly. Naruto, however, does find out about this extra chakra during the fight with Zabuza and Haku, when Haku "kills" Sasuke. The chakra of the Demon Fox seeps out of Naruto and easily overpowers Haku.
Though manifesting his influence during Naruto's fight with Haku, Naruto later obtains the means to actually communicate with the Nine-Tailed Fox and tap into its chakra with the help of Jiraiya, fully manifesting itself at its lowest level during Naruto's battle with Sasuke at the Valley of The End.
Naruto does see Kyuubi in a dream-type thing and tells his that in exchange for staying in his body, the demon fox must give Naruto his chakara. However, Kyuubi laughs at the idea that Naruto has the guts to threaten him. Though the demon fox does agree, because if Naruto dies, he dies. Whenever Naruto experiences extreme amounts of emotion, the nine tail fox demon's chakara is released.
However, as Naruto uses more of the Nine-Tailed Fox's chakra (level four being as high as humanly possible), the seal that keeps the Bijuu inside him is starting to break. The Nine Tailed Fox's influence over Naruto's mind gets stronger while in level four, and damages Naruto's body in the process.
According to the manga, the Nine-Tail Demon Fox is named Kurama because Kishimoto was inspired by the Yu Yu Hakusho character.
Editor's Note:
As far as I can tell, Kyuubi's gender is never specified, or even implied. If you know otherwise, please contact me. Until then, I will refer to Kyuubi as male (though I've noticed some places like to use the female pronouns).
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