**WARNING** SPOILERS AHEAD
Sephiroth, the super-kawaii bishonen, is the main bad guy in Final Fantasy VII. He is a top-ranking member of SOLDIER, ShinRa’s elite force. He is looked up to by all, until one day in Nibelheim, 5 years before FFVII’s story begins. He goes with some soldiers (one of whom is Cloud) and another (low-ranked) member of SOLDIER to Nibelheim, which is Cloud’s hometown. Tifa comes along as a guide. Their mission is to eradicate monsters and fix the problem with the Nibelheim Mako Reactor. When Sephiroth gets there, he finds out that the Mako reactor also holds two gruesome secrets: Mako-infused humans who have become monsters and sealed up in cocoons; and the Jenova project.
Sephiroth never knew his father, and his mother’s name was Jenova (or so he thought), so he had the idea that he might have been created in the same way that those monsters had in the Reactor. Sephiroth went to the abandoned ShinRa mansion in Nibelheim to study all he could about the Mako monsters and the Jenova Project. When he finds out some information, he leaves in a rage and sets fire to Nibelheim, stabbing various and sundry villagers that get in his way. When he gets to the Reactor, he stabs Tifa’s father and goes in. Tifa follows and Sephiroth wrests his sword from her and stabs her, making her fall down the stairs.
Sephiroth enters Jenova’s room, rips the cover off the huge tube where her body is, and begins speaking to his mother’s preserved corpse. Zack comes in and is wounded by Sephiroth. Cloud, running in, helps Tifa and stabs Sephiroth. As Cloud is leaving, Sephiroth emerges from Jenova’s room, holding her severed head. He stabs Cloud, but Cloud knocks him off the bridge and knows no more…
After the incident at Nibelheim, ShinRa reported that Sephiroth was dead. All those that died at Nibelheim were collected by Hojo and injected with Jenova’s cells and Mako energy to become Sephiroth clones.
It turns out that Hojo had married Lucrecia, Vincent’s girlfriend, and she had given birth to Sephiroth. Hojo had injected all three of them (himself included) with Jenova cells. He cloned his son to prove a theory about the Reunion, in which Jenova’s cells come together. He then restored Nibelheim to its original form and installed actors to play the parts of villagers. Sephiroth’s real body did not dissolve into the Lifestream, but was in the North Cave, in a crystal. (I have no idea how it got there) The Reunion was supposed to take place at the North Cave.
After chasing Sephiroth all over the world, Cloud finds out that he was really being summoned by Sephiroth, since he was a clone himself…but a failed clone, not even assigned a number. Tifa had escaped because her martial arts teacher, Zangan, rescued her before ShinRa got to her. Cloud then resolved to follow Sephiroth to the North Cave, to end the danger once and for all, before Meteor fell.