Infinite Tsukuyomi

The Infinite Tsukuyomi is a genjutsu that traps the entire world in an illusion, enslaving them in a dream so that their chakra may be drawn upon.

Performing the Infinite Tsukuyomi requires the Rinne Sharingan and the chakra of the Ten-Tails. Beyond that, how it is performed varies from user to user: Kaguya Ōtsutsuki, as the origin of the Ten-Tails, was able to perform it at will by combining her Rinne Sharingan with her Byakugan; Obito Uchiha, because he lacks the Rinne Sharingan, instead creates a reproduction of the God Tree, the blooming flower of which could act as a stand-in Rinne Sharingan; Madara Uchiha, per his Eye of the Moon Plan, reflects his own Rinne Sharingan off the Moon.

Once cast, the light of the Infinite Tsukuyomi shines across the world, bright enough to dispel the night for as long as it is active. All those who fall under its gaze are immediately trapped in the genjutsu, with the Rinnegan's design appearing in their eyes to represent its influence. Victims of the Infinite Tsukuyomi are rendered immobile so long as they are under its effects, allowing them to easily be wrapped into the God: Nativity of a World of Trees. Those connected to the tree have their chakra fed off of by the user of the Infinite Tsukuyomi and, over time, their personalities and defining features are drained away too, converting them into White Zetsu.[2]

Certain individuals are immune to the Infinite Tsukuyomi. The dead, such as those brought back with the Impure World Reincarnation, are impervious to the Infinite Tsukuyomi.[3] White Zetsu, Black Zetsu, and those whose body Black Zetsu coats are also unaffected.[4] A Rinnegan user can block the light of the Infinite Tsukuyomi, saving themselves and those within their range from its control.[4] In fact, Rinnegan users, through combination with the chakra of the tailed beasts, are the only ones capable of ending the Infinite Tsukuyomi and releasing those trapped within its dreams.[5]

Known Dreams
Those under the influence of the Infinite Tsukuyomi experience dream worlds where their deepest desires are fulfilled. Only a select few of these dreams have been seen:

Hinata Hyūga is in a relationship with Naruto Uzumaki. Neji Hyūga is also alive in this dream.

Kiba Inuzuka is a Hokage, a position he uses to declare a national holiday for dogs. Also, in the anime, all citizens of the village are to have a dog as a pet/partner.

Shino Aburame discovers and tames a giant new insect species.

Chōji Akimichi has a girlfriend who feeds him and loves him for his weight and appetite. Shikamaru Nara decides to never get married. Asuma Sarutobi and Shikaku Nara are also alive in this dream.

Ino Yamanaka is fought over by Sasuke Uchiha and Sai. Inoichi Yamanaka is also alive in this dream.

Rock Lee wins the love of Sakura Haruno by defeating Naruto and Neji in a fight.

Tenten is a member of a completely mature Team Guy. In the anime, everyone she knows have polar-opposite personalities and she is a famed weapons master.

Mei Terumī gets married, with the other Kage attending the ceremony. In the anime, Chōjūrō and Ao (the latter who's also alive in this dream) attend her marriage.[6]

Tsunade lives in a Konoha where none of her loved ones died and none of her friends turned against the village while Dan became the Hokage. Furthermore, in the anime, Konoha's peace and prosperity prompts Jiraiya to write a book about it.

Gaara has a happy childhood with his parents, siblings, and uncle and he gets to play with Naruto whenever he wants.

In the anime, Yamato becomes the official leader of the original Team 7 and is respected throughout Konoha.

In the anime, Killer B goes on an adventure with his fellow jinchūriki and their tailed beasts, saving a princess from the Akatsuki.

In the anime, Karin gets revenge on Zōsui and has Sasuke, who is the Hokage in her dream, smile at her again.

In the anime, Sai learned to properly express himself again and the village came to admire his smile.

In the anime, Kankurō creates his ultimate puppet, which is a giant transforming robot.

In the anime, Temari is respected by her siblings so much, they constantly ask for her advice.

Trivia
"Mugen" (夢幻) can also be translated as "dreams", "fantasy", or "visions", which fits the nature of this technique. In Road to Ninja: Naruto the Movie, Obito casts a "Limited Tsukuyomi" (限定月読, Gentei Tsukuyomi, Literally meaning: Limited Moon Reader) on Naruto and Sakura, sending them to a Genjutsu World housed within a crystal ball. As Akatsuki only has seven tailed beasts at the time, the Rinne Sharingan used has only seven tomoe.