Few things in the anime, Naruto, can charge the atmosphere with as much as excitement and as much awe as when Kyuubi appears on screen. This rendition of the Japanese mythical creature, the Kitsune, is one of the most mysterious and interesting characters in the anime. The Kyuubi, as I'm sure most Naruto fans know, is the nine-tailed demon fox once ravaged Konoha and was sealed by the fourth Hokage inside the body of Uzumaki Naruto, the series' main character. Naruto, for all his kindness, is often plagued by the Kyuubi's efforts to tempt him with raw power. And, when Naruto is unable to contain his strong emotions, he becomes consumed by the Kyuubi, losing both his sanity and control in a bout of pure and unrestrained rage. Naruto does a 360, changing from the lovable prankster that we all love to a rampaging monster who, if he passes a certain point, can no longer distinguish friend from foe.
Kyuubi's Origins
But where does the Kyuubi's origin lie? Kishimoto-sensei certainly didn't just pull this Kyuubi legend out of his hat. Indeed, the Kyuubi is based on the Japanese mythological creature called the Kitsune. Translated, Kitsune means 'fox'. The fox, as portrayed in Japanese folklore, is a cunning creature, intelligent but mischievous. In fact, the Kitsune is often called a 'trickster' and incidentally, this is how Naruto is portrayed at the beginning of the story. The kitsune can transform into a human being, a skill it learns when it reaches a certain age, usually 100. However, it most commonly transforms into a beautiful woman, a seductress, much like 'Naruko', Naruto's female form when he does his Oiroke no Jutsu.
The kitsune can have several tails, ranging from one to nine. The number of tails the kitsune has indicates its age, its wisdom, and its strength. In the anime, when Naruto succumbs to the Kyuubi's temptation of power, his charka leaks out and forms like 'tails'. The number of tails that grows out of Naruto, the stronger he becomes and the more he loses control of himself. So far, in both the manga and in Naruto Shippuden, we have only seen up to four of Naruto's tails. At that point, he completely loses control of himself and he will begin to attack everyone - friend or foe. If he is not contained, or if the Kyuubi is not resealed and Naruto grows all nine tails of the Kyuubi, he will, in a sense, die, and the Kyuubi will once again be released to wreak havoc on the world.
Nine Tails
Thus, the Kyuubi, a nine-tailed fox, is a creature in its prime. Indeed, in the anime, the Kyuubi is said to be the strongest of the nine Bijuus scattered throughout the five countries. One swipe of its mighty tails can cause whole villages to crumble and tidal waves to form. In fact, it's so powerful that it is regarded as a 'natural disaster' by the villagers and is often believed to be a force that comes when human beings become too evil and therefore need to be 'purged'. The reason why Kishimoto chose the Kyuubi to become the strongest Bijuu is probably based on the Japanese legend of the 9 Bijuu, five of which are elemental Bijuu, one of them is Gaara's Shukaku, the Bijuu of Wind. And of course, another one is the Kyuubi, the Bijuu of Fire, the strongest of all the tailed beasts. So that's pretty much it. Hopefully this will give you some idea of where the Kyuubi comes from as well as some of the applications where the Kyuubi is being applied to inside the world of Naruto.