Element Rules

Nature Transformation (性質変化, Seishitsu Henka) is an advanced form of chakra control and a technique that is pivotal for the manipulation chakra and the creation of new jutsu. While Shape Transformation changes the shape and movement of chakra, elemental nature transformation changes the actual nature of the chakra, altering its properties and characteristics. It is notable that few shinobi can use both shape manipulation and nature manipulation.
Nature Manipulation/Transformation is one of two necessary techniques for creating a jutsu, its counterpart being Shape Transformation. Nature Manipulation entails the molding and defining of one's chakra into a innate type of chakra nature
Basic Elements
There are five basic types into which the nature of chakra can be transformed, called the Five Elements Nature Transformations (五大性質変化, Godai Seishitsu Henka). These five types are also called elements and are not only the origin of the names of the Five Great Shinobi Countries, but also the foundation of all elemental ninjutsu. The five basic natures are all connected to each other in a circle, each being weaker than one and stronger than another.
These elements allow for elemental ninjutsu to be performed:

• Fire (火, Hi) natured chakra allows for Fire Release (火遁, Katon), which is strong against Wind but weak against Water.
  
• Wind (風, Kaze) natured chakra allows for Wind Release (風遁, Fūton), which is strong against Lightning but weak against Fire.
  
• Lightning (雷, Kaminari) natured chakra allows for Lightning Release (雷遁, Raiton), which is strong against Earth but weak against Wind.
  
• Earth (土, Tsuchi) natured chakra allows for Earth Release (土遁, Doton), which is strong against Water but weak against Lightning.
  
• Water (水, Mizu) natured chakra allows for Water Release (水遁, Suiton), which is strong against Fire but weak against Earth.
  

Basically, this means that if an elemental jutsu is put against an elemental jutsu of the same level, but of a stronger nature, then the jutsu with the superior nature will prevail. However, a jutsu with a weaker nature can overpower a jutsu with a stronger nature if the former is of a higher level.
Advanced Element Forms

• The Ice (氷, Kōri) nature, used by Haku, is created by simultaneously combining the Water and Wind natures. This nature allows for the use of Ice Release (氷遁, Hyōton) ninjutsu. Ice Release has been shown as being resistant against Fire Release. Yukigakure-nin were able to use a different kind of Ice Release, by drawing on already-existing ice, snow, and cold. This was not a kekkei genkai, as Kakashi could copy one of these techniques with his Sharingan.
  
• The Wood (木, Ki) nature, used by Hashirama Senju, Yamato and Danzō Shimura, is created by simultaneously combining the Earth and Water natures. This nature allows for the use of Wood Release (木遁, Mokuton) ninjutsu.
  
• The Lava (溶岩, Yōgan) nature, used by the Four-Tailed Monkey and Mei Terumī, is created by simultaneously combining the Fire and Earth natures. This nature allows for the use of Lava Release (熔遁; 溶遁, Yōton).
  
• The Crystal (結晶, Kesshō) nature, used by Guren, is possibly created by simultaneously combining the Earth nature and another unspecified nature. This nature allows for the use of Crystal Release (晶遁, Shōton) ninjutsu. (Anime-only)
  
• The Blaze (炎, Honō) nature, used by Sasuke Uchiha, originates from the flames of Amaterasu and allows the use of Blaze Release (炎遁, Enton) ninjutsu. It is unknown what this nature entails.
  
• The Storm (嵐, Arashi) nature, used by Darui and stolen by Hiruko, is possibly created by simultaneously combining the Lightning and Water natures. This presumed nature allows for the use of Storm Release (嵐遁, Ranton) ninjutsu.
  
• The Boil (沸騰, Futtō) nature, used by Mei Terumī, is created by simultaneously combining the Water and Fire natures. This nature allows for the use of Boil Release (沸遁, Futton) ninjutsu.
  
• The Dust (塵, Chiri) nature, used by Ōnoki, is possibly created by simultaneously combining the Earth nature and another unspecified nature. This nature allows for the use of Dust Release (塵遁, Jinton) ninjutsu.