In Final Fantasy VII, Cloud is introduced as a mercenary and former member of SOLDIER, 1st Class, an elite military unit operating under the Shinra Company. Presented at the game's start as apathetic to anything unrelated to his job, Cloud's blasé attitude towards the goals of AVALANCHE, a resistance group fighting against Shinra, and the threat posed to the planet causes conflict with the other characters, and his background produces misgivings as to Cloud's motivations and trustworthiness. Cloud, meanwhile, takes pride in his past, confident in his abilities as a "former member of SOLDIER." Despite appearing detached to members of AVALANCHE in the game's introductory sequence, Cloud does display moments of camaraderie, some depending on the player's choices. When confronted by his childhood friend and AVALANCHE member, Tifa, Cloud agrees to keep his boyhood promise to protect her, continuing his AVALANCHE membership despite never having become a famous hero. Following the player's departure from Midgar, Cloud is appointed group leader by the other members of the party, upsetting Barret, AVALANCHE's original leader.
In interacting with Aerith, a flower girl wanted by Shinra and sole survivor of an ancient race known as the Cetra, Cloud's character is further expanded upon. He shows increased signs of good-natured humor and protectiveness, as opposed to his antagonistic use of sarcasm with Barret This love triangle aspect between Cloud, Tifa and Aerith is primarily focused on in the first disc, and at times is used to humorous effect.
When the player arrives at the inn in the town of Kalm, Cloud narrates to the group his history with Sephiroth, a legendary member of SOLDIER and the game's primary antagonist. According to Cloud, the two were "war buddies," having worked together on previous missions prior to the one in Nibelheim. Having joined SOLDIER to emulate Sephiroth, Cloud states in the flashback that he signs up for "big missions" whenever they become available, as the war had already ended and thus his chances for fame. When Sephiroth, upon discovering documents surrounding the nature of Jenova and his birth, mistakes himself to be a Cetra and razes Nibelheim, Cloud chases after him. Finding Tifa wounded by Sephiroth at the Mt. Nibel Mako Reactor, Cloud discovers Sephiroth releasing Jenova, an extraterrestrial life-form and Sephiroth's "mother," from imprisonment. Cloud relates to the group that he then confronted Sephiroth, but he is unable to remember the events directly following.
In fact, these events did not occur as Cloud describes; rather, they are an amalgamation of Cloud's actual past (as a member of the Shinra army who failed to enter SOLDIER) along with his friend Zack's own past, mixed with memories gleaned from Tifa's mind, created out of a combination of shame, Jenova cells and manipulation by Sephiroth. The effects of this self-fabrication are made noticeable to the player prior to Cloud's discovery of the truth—Cloud, at mention of names from the past or moments related thereto, will experience a brief flashback and collapse momentarily, suffering from apparent physical pain, and visual and audio cues are given to indicate discrepancies. It is not until after he and Tifa fall into the Lifestream that he, with her encouragement, can piece his past back together, and restore his own personality from underneath the amalgam where he had subconsciously hidden it, and dismisses Sephiroth's deceit that he is an artificially-constructed Sephiroth-clone.