Kanetsugu Naoe was the son of Kanetoyo Higuchi, but took the name of his wife when he came of age. He was from Echigo Province, the territory of the Uesugi clan of Kenshin Uesugi. Kanetsugu became a strategist for the Uesugi in 1577 when he was eighteen, leading the Uesugi armies to victory at the Battle of Tetorigawa against the Oda clan of Nobunaga Oda. He continued to serve as an Uesugi retainer afterwards, but volunteered to fight alongside the Sanada in 1585 at the Battle of Ueda Castle, seeing the invading Tokugawa as a possible future threat to the Uesugi clan.
By 1590, however, the Uesugi were all but conquered by the Toyotomi, and Kanetsugu was forced to submit to Hideyoshi Hashiba. In 1590, he participated in the Siege of Oshi Castle, assisting Mitsunari Ishida in the capture of Oshi Castle, as a part of the Odawara Campaign. In 1598, after Hideyoshi died, he assisted Mitsunari, as the Uesugi were compelled to assist Mitsunari in reuniting Japan under the Toyotomi banner once more. He took part in the Siege of Kyoto that year, aiding Mitsunari against a coalition of enemies led by Masanori Fukushima, and joined his "Western Army" in 1600 when the time came to fight the Tokugawa's Eastern Army.