Nibelheim is a small mountain village located at the foot of Mt. Nibel, near Cosmo Canyon. There is a Mako Reactor on the nearby Mt. Nibel. The Shinra Mansion is the most prominent structure in the town.
The Shinra Mansion on the outskirts of Nibelheim holds many secrets of Professor Hojo's experiments. The mansion, having been in the ShinRa Electric Power Company's possession for ages, was the setting for the experiments that would become the Jenova Project. It is seen as a somewhat derelict house of grandeur with a long walk leading from the outskirts to the entrance.
The basement was used for experiments by the head of Shinra's Science Division, Hojo. In competition with his rival Hollander, he tried to create a human with the powers of an Ancient. He decided to use Jenova's cells on his colleague and lover Lucrecia Crescent while she was in early stages of pregnancy, which ultimately led to the birth of Sephiroth, a child born with Jenova cells. Although Sephiroth did not possess the powers of an Ancient, he was raised to be the ultimate SOLDIER while Lucrecia was unable to have a role in his life at all.
The Turk Vincent Valentine, whose mission was to protect the scientists during their experiments, fell in love with Lucrecia. When he heard of the ghastly things being done to her and her unborn child, Vincent confronted Hojo who shot Vincent. Lucrecia, realizing Vincent had been trying to protect her, tried to save his life.
She discovered a way to use Chaos, the servant of the Omega Weapon, to save Vincent, giving him the ability to transfigure. Hojo, seeing the use of this ability, implanted more and more monsters within him, but Vincent saw himself as a monster, and a failure for failing to save Lucrecia. He repented by resigning to a coffin in the mansion's basement, where he slept almost undisturbed for 23 years.
Cloud and Tifa's Childhood
Nibelheim remained a peaceful town and Cloud Strife and Tifa Lockhart grew up there. While Tifa played with her friends, Cloud isolated himself. His mother was his only family, as his father had died while he was young. He considered the other children childish and himself superior.
Tifa's mother died and she believed she could find her again by climbing Mt. Nibel. She injured herself during the trek and fell into a coma and Cloud, who had followed her, was blamed for the incident and forbidden from getting close to Tifa by her father. Cloud idolized Sephiroth, the hero SOLDIER of the Wutai War, and thought if he became a hero like him people would accept him, and he would win Tifa's attention. Before leaving for Midgar he met up with Tifa and told her his plans to become a SOLDIER, promising he would come to her rescue whenever she needed protection. Cloud departed and Tifa began training with Zangan, a martial arts expert, and worked as a guide on Mt. Nibel for tourists and visitors.
The Nibelheim Incident
See: Nibelheim Incident.
Nibelheim was re-created by a facade of a town, built to be almost identical in every way. A mass-coverup made all forget the incident ever happened.