Tobi explains that the illusion was originally an exact replica of the real world, but distortions were created when Naruto and Sakura were inserted into it, similar to the ripples created when a stone breaks the water's surface. This alternate Konohagakure is threatened by a mysterious S-rank criminal and missing-nin referred to as the Masked Man, revealed to be receiving guidance from Tobi projecting himself in the genjutsu as the spirit of "Madara"; though Tobi knows everything about the Genjutsu World, he is unable to control it directly. After facing a variety of trials, Naruto and Sakura eventually free Menma from Tobi's control and break free of the Limited Tsukuyomi thanks to Naruto's restored memory as a result of him recalling his interactions with Jiraiya while looking at a prophetic writing known as the Red Moon Scroll left by him, throwing a kunai at Tobi and shattering the crystal ball, putting an end to the Genjutsu World.
As a result of distortions in the Genjutsu World, the alternate reality counterparts for most of Konohagakure's shinobi have dramatically altered personalities and behaviours. Following is a list of characters and their alternate traits in the Genjutsu World, in order of appearance:
- Hinata Hyūga — In the Genjutsu World, Hinata is sharp-tongued, domineering, and provocatively dressed. Her affection for "Menma" frequently manifests in violent fits of jealousy that border on vulgar death threats to other female characters, primarily Sakura (realising that she had been on a date with him when they first met). Hinata also has a rivalry with Sakura over Menma's love, much like the rivalry between the real world's Sakura and Ino. Nonetheless, Hinata is very loyal to her friends and became very angry at Tenten after she was accused for being a traitor, but later openly congratulated her on saving the village.
- Kiba Inuzuka — Kiba's alternate counterpart is a cat-lover who wants to be a cat shaman, and he frequently fights with Akamaru because he is a dog and that he constantly bites him. The tattoos on his cheek are altered with small horizontal marks to represent whiskers, and he frequently appends his speech with meowing or lion-roaring sounds.
- Shino Aburame — The illusion version of Shino, though having the same personality as the original, is a horticulturist who hates any and all insects with a passion. As a result, he carries around insecticide and frequently bathes to try and rid himself of his clan's bugs.
- Sasuke Uchiha — In the alternate reality, Sasuke is a smooth-talking playboy who would rather love than fight, due to the fact that the events of the Uchiha massacre and Sasuke's defection never occurred. He initially flirts with Sakura and woos her by giving her a large rose and saying he will always be on her side, but she later learns that he treats all the girls his age the same way. On the other hand, he acts like his real counterpart around boys. In Tenten's dream, Sasuke constantly tries to flirt with Sakura, while Sakura constantly refuses, and sometimes even punches Sasuke.
- Choji Akimichi — In the Genjutsu World, Chōji is serious, slim, physically fit, and the brains of the team, similar to the real world's Shikamaru. The tattoos on his cheeks are angular and the kanji on his chest reads "work" (職, shoku) instead of "food" (食, shoku). He avoids going out to eat and dislikes using his clan's traditional techniques.
- Shikamaru Nara — The alternate counterpart of Shikamaru is gluttonous and dull-witted like the real world's Chōji, although he is still slim. He is incapable of even performing simple calculations and finds everything around him humourous. His hairstyle is also different, appearing more fanned-out and shorter. His crass and moronic behaviour sometimes irritates Chōji, leading to arguments.
- Ino Yamanaka — Ino's counterpart is shy, modest, polite, and friendly. She dislikes confrontation and often tries to find ways to peacefully end disagreements between Shikamaru and Chōji, to no avail. She also gives all characters name suffixes like the real world's Hinata, and dresses simply, her hair falling down.
- Neji Hyuga — The alternate reality version of Neji is devious and perverted, and he uses his Byakugan to peep on the girls (even Hinata) in Konoha's bathhouses. Nonetheless, Neji can sometimes be very serious, similar to his real world counterpart, during serious situations.
- Tenten — In the Genjutsu World, Tenten is clumsy with Ninja Tools, but still constantly wields them, so she frequently injures herself and tears her clothing. As a result, she seems to have become skilled at first aid and sewing, as her entire body is covered in patches.
- Rock Lee — Rock Lee is virtually identical to his real world counterpart, although he is slightly shyer. The biggest difference is that he steals and wears women's undergarments, much to everyone's dismay. Unused concept art depicts him crossdressed as a kunoichi, with a feminine figure, hairstyle, and makeup. In Tenten's dream, Lee is the opposite of his real world counterpart, where he shows very respect towards his friends, and exaggerates too much sometimes which leads to be embarrassing for Tenten. Lee is also not obsessed with training, a major difference from his real world counterpart.
- Sai — The Genjutsu World version of Sai is a temperamental artist instead of an emotionless shinobi. He dresses in the style of a European renaissance artist but has no real artistic talent, producing paintings that look like children's drawings.
- Tsunade, the Fifth Hokage — The alternate counterpart of Tsunade is more bookish and less vain, wearing glasses and appearing somewhat elderly, like an actual grandmother, with a flat chest.
- Shizune — In the Genjutsu World, Shizune remains Tsunade's aide, but their personalities and appearances are somewhat switched, as Shizune is a busty, lipstick-wearing lover of alcohol.
- Tonton — Tsunade's pet pig is completely black in the Genjutsu World, and also far more aggressive, seeming almost scary.
- Kakashi Hatake — The alternate version of Kakashi is passionate, energetic, and a proponent of the "Power of Youth", causing his personality to be generally similar to the real world's Might Guy.
- Might Guy — In the alternate reality of the Genjutsu World, Guy is a depressive, unenergetic shinobi who thinks of himself as an old man past his prime, almost like the real world's Kakashi. In Tenten's dream, Guy's personality is different from Naruto: Road to Ninja, as he doesn't consider himself an old man past his prime, but acts very decent and respectful towards other and is not obsessed with training, unlike his real world counterpart.
- Kushina Uzumaki and Minato Namikaze — Menma's parents who never died in the Genjutsu World (they both look younger, similar to Kakashi's age in this version). They are jōnin and they prioritise family above their duties as ninja, which has kept them safe from harm. Though loving parents, their relationship with the rebellious Menma seems to have recently become strained. When Naruto arrives in the village, he unwittingly receives scoldings from them.
- Jiraiya — In the Genjutsu World, Jiraiya was sent on a mission to recover the Red Moon Scroll, which holds the secret to defeat the Masked Man, however, the Masked Man ambushed and killed him on the way back to the village. He sealed the scroll in a chest which only Minato would be able to open. His personality was never revealed, but he seemed to maintain a strong bond with his pupil, Minato.
- Gamabunta — In the alternate reality, Gamabunta and his gang of toads were tasked with protecting the Red Moon Scroll for Jiraiya after he died. Gamabunta uses a cigarette holder instead of a pipe, and despite knowing of Jiraiya's ties to Konohagakure, attacks the Konohagakure ninja who come to recover the scroll, believing that Naruto is a traitor. He and his toads vanish when Minato breaks the seal.
- Yugito Nii — In this reality, she became one of the many victims of the Masked Man.
- Akatsuki — In the Genjutsu World, Tobi and Zetsu are not members, and the Akatsuki are hired mercenaries instead of criminals who Tsunade employed to provide backup for Naruto in his battle with the Masked Man, during which the Genjutsu world version of Itachi Uchiha (who serves as the leader), Kisame Hoshigaki, Deidara, Sasori, Hidan, Kakuzu, Pain, and Konan pair off against the Nine Masked Beasts. They appear loyal to the ninja world, but only do what they were told to do in their contracts.
- Menma Uzumaki — Naruto's counterpart, and the true identity of the Masked Man. He is the true son of the Genjutsu World's Minato and Kushina, and the jinchūriki of Kurama's counterpart, the Black Nine-Tails. At some recent point in the past, he left the village and became an S-Rank criminal, changing his hair to black and slightly longer and donning a mask to hide his activities. He uses dark, destructive versions of Naruto's ninjutsu and is in sync with the Black Nine-Tails, allowing him to create constructs from its chakra and even completely unseal the tailed beast to serve him. After Tobi was defeated, Menma's appearance returned to normal. Normally, Menma's personality is somewhat similar to Sasuke's as Menma is calm and collected, and is not very interested in girls. Menma is also somewhat disrespectful towards his parents, as he usually reads Minato's paperwork without permission.
- Sakura Haruno — Sakura Haruno's Genjutsu World counterpart does not appear directly in the film, instead switching places with Sakura and appearing in the real world as a living illusion with a bit of amnesia, as seen in the anime tie-in episode, "Road to Sakura". In the Genjutsu World, she was treated as a daughter of heroes, respected and treated kindly by the community. Sakura's personality is similar to the real world's Hinata, as Sakura has a huge crush on Menma and being shy towards, while acting aggressively towards Sasuke, even punching him through a wall, due to his flirty attitude. Sakura also has a rivalry with Hinata over Menma's love, much like the rivalry between the real world's Sakura and Ino.
- Kizashi and Mebuki Haruno — In the Genjutsu World, Sakura's parents were talented and famous shinobi, and her father, Kizashi, was the Fourth Hokage. They died protecting the village when she was just a child, and have gone down in history as heroes.
- The one-shot manga special Road to Naruto the Movie, as well as its animated version, features Tobi gathering intel on Naruto to prepare this illusion.
- Sasori from the genjutsu world doesn't use Human Puppets, rather he is only seen using the puppet, Sanshōuo. It is unknown if his body is still modified or not, although he still appears youthful.
- It is implied that Yahiko, from the genjutsu world, has also died; how or when he died is left unknown. However, like his counterpart, his corpse has clearly still became the vessel for the Deva Path of Nagato's Six Paths of Pain.
- At some point, when Naruto annoyed her, Kushina's hair becomes similar to Kurama's tails and the cover of chapter 503.
- In the anime, after Tenten was caught in the Infinite Tsukuyomi, she found herself located in a world, very similar to this one, with the main differences being: Rock Lee and Might Guy had stylish men personalities, Menma Uzumaki was called Menma Namikaze and an ally of Konohagakure, while the antagonists were Hanzō and Amegakure.