Despite his bravado, Cloud is unable to make it into SOLDIER and becomes an ordinary Shinra infantryman. While working for Shinra he meets a first-class SOLDIER named Zack Fair in Modeoheim, and the two become friends after learning they are both "backwater experts." When he and Zack infiltrate a Mako Excavation Facility on the way to Modeoheim, they encounter Genesis Rhapsodos and Dr. Hollander. When Hollander attempts to escape, Cloud is briefly successful in capturing him. However, Hollander manages to break free of Cloud's grip in the struggle.
Cloud gives pursuit, but both he and Tseng, leader of the Turks, are taken down by Angeal Hewley off screen. On June 28th, 0001, Cloud is among those ordered to protect Professor Rayleigh in Midgar from the insurgency organization AVALANCHE. Though he is unsuccessful, both of their lives are saved by the Player Turk. During this incident, Cloud shows off some impressive sword skills for a regular infantryman.
On September 22nd, 0002, Cloud later returns to Nibelheim, along with Zack and Sephiroth, to investigate a damaged reactor on Mt. Nibel and Tifa is to act as their guide. Ashamed of his failure to join SOLDIER, Cloud hides his identity from the townspeople, and especially Tifa, though he does reveal himself to his mother. When the expedition reaches the reactor, Sephiroth discovers Professor Hojo's failed experiments with Mako soldiers as well as where Shinra had interred Jenova, who Sephiroth mistakenly believed was his mother.
Falling into madness, Sephiroth immerses himself in Professor Gast Faremis's writings and discovers his own dark past. He comes out from the Shinra Mansion basement on October 1st and sets about destroying the village. Cloud witnesses his mother's death in the ensuing fire and rushes to the reactor to confront Sephiroth where he finds both a wounded Tifa and a barely conscious Zack. A grief-stricken Cloud picks up Zack's Buster Sword, catching Sephiroth off guard in the reactor core and impaling him, then returns to attend to Tifa. Sephiroth, badly wounded, emerges from the reactor core, and when Cloud attacks again, Sephiroth stabs him with the Masamune. Cloud summons previously unknown strength and uses the katana as a lever to hurl Sephiroth into the Mako pit below. The observing Turk, who does not see this, assumes Sephiroth jumped in of his own volition and reports back to Shinra to this effect. Cloud collapses immediately thereafter.
Afterward Cloud and Zack become Professor Hojo's test subjects. Injecting them with Jenova's cells and exposing them to Mako, Hojo attempts to test his Jenova Reunion Theory and turns them into Sephiroth Clones. Four years later (December 19th, 0006), Zack breaks out of his confinement and helps a comatose Cloud escape, giving him a SOLDIER uniform to wear because his old clothes are soaked with Mako. Due to the experiments, Cloud is in a weak and delirious state. As they escape, Zack speaks continuously to the unresponsive Cloud about his life and his plans for both of them to become mercenaries in Midgar after finding out that four years have passed since Hojo took them. Zack carries the comatose Cloud around, and though Cloud takes no part in the events, is present when Zack defeats Genesis.
After almost a year of running, the pair finally arrive outside Midgar in September 0007. However, the Shinra forces finally catch up. Zack fights back to defend both Cloud and himself against overwhelming numbers. In the end, after single-handedly overcoming the majority of the Shinra soldiers, Zack is gunned down by the last few, and Cloud is left for dead after the soldiers see him in his vegetative state. However, having witnessed the chaos, Cloud manages to crawl over to where Zack is mortally wounded. In his last few seconds, a blood-soaked Zack entrusts the Buster Sword to Cloud, and tells him that his legacy will live on inside Cloud, before dying. After some time Cloud, deeply distressed, scrambles to his feet, Buster Sword in hand, and begins trudging off towards Midgar.
Shortly thereafter, in the Sector 7 Train Station, Cloud and his mind undergoes a radical transformation due to the Nibelheim incident, the Mako Poisoning and Jenova cells he received from Hojo's experiments, and finally the death of Zack. Cloud impresses Zack's memories into his own, along with Tifa's memories of him and his own ideal image of himself as a SOLDIER, creating a new set of memories with an accompanying persona. What emerges in Cloud's mind is a reality in which he successfully joined SOLDIER and was Sephiroth's partner -- Zack did not exist -- and in most of Cloud's twisted and warped memories he takes Zack's place. Taking up Zack's plans for them, Cloud presents himself in Midgar as a former First Class SOLDIER, now a mercenary for hire.