The Nibelheim Incident, also referred to as the Sephiroth Incident and the Nibelheim Case, is a pivotal event where Sephiroth, acclaimed hero of SOLDIER, descends into madness and destroys the village of Nibelheim. The town's destruction marks the beginning of Sephiroth's villainy after he learns of his "true" origins.
The incident takes place between September 22nd and October 1st, 0002 of the Timeline.
The Nibelheim Incident
Cloud meets his idol Sephiroth, but never attains his goal of becoming SOLDIER First Class, becoming a mere Shinra infantryman who follows Zack Fair on missions. Sephiroth and Zack and their guards head to Nibelheim to investigate a broken section of the Nibelheim Reactor. Cloud is too ashamed to show his failure to his hometown, and keeps his helmet on when they meet with Tifa, their guide. When a picture is taken of the party before heading out, Cloud stays out of it.
As the group makes its way to the reactor a bridge collapses and a Shinra infantryman goes missing. Upon arriving at the reactor Sephiroth and Zack fix a broken valve, but find the hideous by-products of Hojo's experiments: makonoids within pods who once were humans. The back of the reactor has a sealed door, inscribed with the name Sephiroth had come to associate with the mother he had never met: Jenova. Sephiroth wonders if he is no different from the monsters, and his former friend, Genesis Rhapsodos, who had earlier deserted Shinra, appears to confirm his suspicions. Wanting to learn more, Sephiroth locks himself away in the Shinra Mansion basement and reads about the Jenova Project. The answers drive him insane.
Believing himself to be the heir to the Cetra legacy, due to a misconception that Jenova was an Ancient, Sephiroth slaughters most of the townsfolk and burns the town to the ground. Zack, Tifa, Zangan, and Cloud try to help, but their efforts are in vain. Cloud's mother and Tifa's father are killed. Sephiroth climbs Mt. Nibel to find his mother, Jenova, inside the reactor. He breaks into the sealed room and speaks with an angelic effigy that masks Jenova from view about finding the Promised Land. He tears the effigy off the machine, revealing an alien monster in a tank whom he refers to as "mother".
Tifa and Zack confront Sephiroth in the reactor. Tifa picks up the discarded [Masamune]] and rushes at Sephiroth, but is disarmed and incapacitated. Zack fights Sephiroth but is defeated and cast aside. Finally Cloud charges at Sephiroth, impaling him with Zack's Buster Sword. Cloud leaves to check on Tifa and Zack, but Sephiroth staggers out of Jenova's chamber, holding her severed head. Cloud attacks Sephiroth again, but is disarmed and impaled through the chest. Using the sword as a lever Cloud picks up Sephiroth, and throws him into the Lifestream below the reactor.
Zangan rescues Tifa, but Cloud and Zack are captured by the Turks. Cloud and Zack are used as test subjects in Hojo's Jenova Reunion Theory. They, and the survivors of Sephiroth's rampage, are injected with Jenova cells and kept in tanks of Mako.
The entire incident is covered up and removed from history- ShinRa rebuilds Nibelheim, and the village continues use as a place for Hojo's twisted experiments.