The Uchiha clan were one of the founding noble families of Leaf village. The clan itself is said to be descended from the Hyuuga clan who possess the bloodline of the Byakugan eye. Because their clan possessed the Sharingan or "Wheel Eye," the Uchiha excelled at being able to read and fend off attackers. This made them prime candidates to help found the Konoha Military Police Corps. The organization itself would go on to incorporate the Uchiha fan symbol into their official logo.
Select few members of the Uchiha clan possess the ability to activate the bloodline Sharingan eye. This doujutsu (eye skill) gives one the ability to read Genjutsu, Taijutsu and Ninjutsu and then defeat it. As such, the clan member can view a technique being performed and see the tricks and movements required to be able to complete it. However the clan member can not copy techniques which are unique to another bloodline. It also gives one the ability to cast jutsu techniques only possible by possessing the eye.
The clan itself is known for their ties to fire. For a clan ninja to be seen as an adult, they must be able to utilize a Katon (Fire Element) jutsu such as Goukakyuu no Jutsu. Thus is the tie between the manipulation of fire and the mind of an Uchiha member.
Sharingan Eye Variations
Normal Uchiha Clan Member Eye
Sharingan - Uchiha Itachi Mangekyou (Kaleidoscope) Form
This is the rare Mangekyou (Kaleidoscope) form which is said to only appear in a few Uchiha members. Uchiha Itachi was able to finally master this form during the period he killed his clan. In this form Itachi is able to use the Amaterasu and Tsukuyomi Doujutsu techniques.
Sharingan - Hatake Kakashi Mangekyou (Kaleidoscope) Form
This Mangekyou Sharingan form was revealed by non-Uchiha clan member Hatake Kakashi. Whether this form is due to Kakashi or some inheritance from what Uchiha Obito was capable of is unknown. Using the eye, Kakashi can use a technique which appears to collapse space in around a focus point and transport it to another location.
Sharingan - Uchiha Madara Mangekyou (Kaleidoscope) Form
This Mangekyou Sharingan form was attained by Uchiha Madara. After developing the Sharingan, Madara and his younger brother trained against one another and eventually awakened their own version of the Mangekyou. The use of these eyes increased the brothers' strength and allowed them to take over leadership of the clan. Unfortunately the usage of the eyes lead Madara to lose his vision.
Sharingan - Madara's Brother's Mangekyou (Kaleidoscope) Form
This Mangekyou Sharingan form was attained by Uchiha Madara's younger brother. After developing the Sharingan, both brothers trained against one another and eventually awakened their own version of the Mangekyou. The use of these eyes increased the brothers' strength and allowed them to take over leadership of the clan.
Sharingan - Uchiha Madara's Eternal Mangekyou (Kaleidoscope) Form
Unable to accept being blind, Madara did everything he could to regain his vision. A desperate Madara eventually removed his brother's eyes to use as his own. As a result, Madara awakened a new more powerful set of eyes which allowed him to see the light once again. This new eye form would combine the look of both he and his brother's Mangekyou Sharingan.
Sharingan - Copying Wheel Eye (Uchiha Clan)
Character Use: Uchiha Obito, Uchiha Itachi, Uchiha Sasuke, Hatake Kakashi
Sharingan is the blood inheritance limit of the Uchiha Clan. The Uchiha are said to be descendants of the Hyuuga, with the Byakugan changing into the Sharingan over time. This doujutsu (eye skill) gives one the ability to read Genjutsu, Taijutsu and Ninjutsu and then defeat it. As such, the clan member can view a technique being performed and almost instantly memorize the movements required to be able to complete it, including the needed chakra moldings and seals used. However the clan member cannot copy techniques that are unique to another bloodline and the clan member must have a body capable of meeting the chakra and physical requirements to do the jutsu. This rarely stops the clan member though, as such stressful situations often push their limits farther and allow them to harness their full potential.
The Uchiha clan member is not granted the Sharingan at birth; it is only activated later in life, typically during a time of emotional stress in the heat of battle. The Sharingan itself can be transferred to another non-Uchiha by a medical ninja, such as happened with Leaf ninja Uchiha Obito to his teammate Hatake Kakashi. Because his body was not born to carry the Sharingan, the eye is always activated and it burns Kakashi's chakra when used. To lessen the impact of the Sharingan on Kakashi's body, he normally keeps the eye hidden and out of use. Also of note, is the fact Kakashi, a non-Uchiha, was able to advance the Sharingan from two tomoe to three tomoe after gaining the eye.
The Sharingan itself contains three tomoe (comma). A higher mastery of the Sharingan can be seen in the creation of a new tomoe in the eye, with three tomoe being the typical highest form of the eye. The rare Mangekyou form is a unique evolution of the Sharingan beyond the three tomoe form, please see its entry for more information. An eye possessing two tomoe can allow the Uchiha clan member to track the movement of an opponent and do some minor copying of an opponents attack. For avoiding incoming attacks, the Uchiha's speed and agility will greatly control whether they can move to avoid it. However, three tomoe will greatly help in this area.
Two tomoe will also allow the ninja to pierce Genjutsu and see the surrounding reality for what it really is. It can also allow the member to pierce anotherís body and see their chakra. While the eye is not refined enough to see the tenketsu and chakra circulatory system like the Byakugan, it can view the movement and flow of chakra. This can help them tell if a person is trapped in a Genjutsu, or if an attacker is a real threat or merely a bunshin.
An eye containing three tomoe will allow the ninja to see the image of an attackerís next move from the slightest muscle tension in their body. This prevents wasteful movement and allows the Uchiha clan member to conserve much needed chakra in battle. It allows them to synchronize their movement to strike at an area moments before their opponent is even in that spot, essentially allowing them to strike out and hit their opponent before they're even there.
Three tomoe also grants the Uchiha the ability to do Genjutsu and hypnosis after locking eyes with an enemy. This can be used to cause their opponent to do an attack of the Uchiha's choosing. This hypnosis can also be used as a Genjutsu counter, which is the ability to turn a Genjutsu spell back upon the original caster without the requirement of forming any handseals.
Mangekyou Sharingan - Kaleidoscope Copying Wheel Eye (Uchiha Clan)
Character Use: Uchiha Itachi, Hatake Kakashi
Sharingan is the blood inheritance limit of the Uchiha Clan. The Mangekyou Sharingan is a legendary doujutsu ability which has only emerged in a few clan members in its history. There is still mystery surrounding the eye and the Uchiha clan itself. Each user develops their own unique looking Mangekyou. The requirements for gaining the Mangekyou are very controversial in nature. After Uchiha Itachi murdered his best friend Shisui he gained Mangekyou. He told his younger brother Sasuke that to gain the Mangekyou, he too would have to kill his closest friend. Itachi told Sasuke that a scroll in their clan shrine revealed the true original purpose of the clan doujutsu. This scroll and Itachi himself revealed that the former leader of their clan, Uchiha Madara and his younger brother were the first to obtain Mangekyou. Unlike Itachi though, they apparently did not have to kill their best friend to obtain it, merely the competition between them allowed it to develop.
Usage of the Mangekyou techniques drains quite a bit of a userís chakra, more so than any other normal technique. Also as a result of Mangekyou usage, the bearer will slowly lose their vision. Madara lost his vision before his brother and sought to regain his power. To do so he removed his brother's eyes and made them his own. With these new eyes, his Mangekyou took on a combined appearance of his original Mangekyou and his brother's. These "Eternal" Mangekyou eyes returned his vision and gave him unbelievable strength. With this strength it was said Madara used Sharingan's normal ability to supress the Kyuubi and tame it.
Itachi originally told Sasuke that if he gained the Mangekyou, then there would be three people who could handle it. After the time skip in the series, Hatake Kakashi revealed he too had gained Mangekyou Sharingan. Later it was revealed that Uchiha Madara himself was still alive, and was the "third" user in Itachi's statement. What part, if any, that Kakashi and Uchiha Obito's eye plays has yet to be determined.
Itachi's three named Mangekyou techniques are Amaterasu, Tsukuyomi and Susanoo, all mythological deities. Kakashi's Mangekyou technique has not yet been named.
The Amaterasu or Goddess of the Sun technique is generated by the right Mangekyou eye. It is a Ninjutsu technique which uses the Mangekyou form to create a powerful black fire which can burn through most anything. As it has been said that anything within the Mangekyou's vision will burn to ash if consumed by the fire. The fire itself is said to burn for 7 days and 7 nights. The fire is also regarded as the strongest of Mangekyou's physical attacks.
The Tsukuyomi or God of the Moon technique is generated by the left Mangekyou eye. It is a Genjutsu technique which uses the Mangekyou form to initiate a mentally and physically harmful illusion. To utilize the illusion, the clan member will look into the eyes of his opponent and cast a Genjutsu spell on them. The spell takes place in the mind of the one affected, while the jutsu is cast the one it was cast upon is at the total mercy of the Uchiha clan member. The clan member has full control over space and time in the jutsu and can place the one affected through any hell they desire for any length desired. The technique itself only lasts for but a second in reality, but the one affected could have lasted through several days of pain. It is said only a natural born member of the Uchiha Clan can defeat it, this may mean either an Uchiha also holding the Mangekyou or one fully skilled in the three tomoe Sharingan form.
The Susanoo or God of the Sea and Storms technique is generated by both Mangekyou eyes. It is a technique which uses the Mangekyou form to create a sword wielding specter which will surround the user. This specter wields a shield for defense and a blade known as the Totsuka Sword. Anyone or anything cut by the blade will be sealed away into a Genjutsu of blissful oblivion until the end of time.
The third Mangekyou technique seen in the series is used by Hatake Kakashi and remains unnamed. With this technique, Kakashi forms a handseal to activate the Sharingan in his left eye and change it into his Mangekyou form. Kakashi then focuses on a point on the body of his target. The area around the target will then begin to warp and collapse in on itself, resulting in that area being quickly "sucked" out of existence and transported to another location.
Information from Leafninja.com