The Narrator is arguably the chief instigator of trouble in the video game Naughty Bear, being the voice that drives Naughty Bear to his horrific acts.
He is most likely either a fictional "villain" within the setting or Naughty Bear's own disturbed thoughts. The latter seems most likely as Naughty Bear seems able to hear the Narrator and often breaks the fourth wall. The Narrator encourages Naughty Bear to do horrific things, often for revenge but sometimes just "for the evulz".
The Narrator also acts to alert Naughty Bear when the other residents set out to eliminate Naughty Bear by hiring the military bears, summoning the superhero bears, or building the R0B0-B34R5. This quality supports the notion that the Narrator could be a villain within the setting. However, Naughty Bear is often witness to these events and the Narrator simply rehashes what is being said.