The Shinigami

Urahara is the former captain of the 12th Division of the Gotei 13 who lives in exile in the human world. And based on the other shinigami's reaction to his name alone is a clear clue that Urahara was a respected shinigami. To everyone else, Urahara isn't just the former 3rd seater of the 2nd Division, former corps commander of the Detention Unit of Onmitsukido, former 12th Division captain of the Gotei 13, and the former head of the Shinigami Research Institute. This could also mean that for the last 100 years, by word of mouth about the former captain, Urahara has left behind an intimidating impression of sorts on the younger shinigami.

Exile

Urahara is an intelligent man and an exceptional inventor, but unfortunately it was one of his inventions that led to his exile 100 years ago. Urahara created a special and dangerous gigai, an artificial body which shinigami can use in the human world. This gigai was completely undetectable. More importantly, it devoured the spiritual power of the shinigami. By using the gigai, the shinigami would never recover their power, their coordination with the gigai diminishes and the konpaku (soul) eventually becomes powerless.

The Hougyoku

Urahara also created another dangerous mechanism. This was called Hougyoku. Hougyoku is a mechanism that could transform a hollow into a shinigami and a shinigami into a hollow. Every shinigami has their limit that can't be passed but there was one way to surpass it and that was to become a hollow. Urahara knew that Hougyoku was dangerous, especially if the wrong person found out about it so he tried to destroy it. Unfortunately, he found no way to destroy it so he instead put a barrier around it and buried it in a konpaku to try and conceal its location.

The konpaku that Urahara decided to conceal the Hougyoku was Kuchiki Rukia. Urahara, finding Rukia after she gave her shinigami powers to Ichigo, offered her one of his gigai. The gigai just happens to be one of the special ones that eats her remaining powers. It seems that Urahara is trying to hide Rukia from Soul Society's detection since she is the carrier of his dangerous creation.