It was narrated that the Prophet (peace and blessings of Allaah be upon him), said to his companions when they returned from a military campaign, “We have come back from the lesser jihaad to the greater jihaad.” They said, “Is there any greater jihaad than jihaad against the kuffaar?” he said, “Yes, jihaad al-nafs (jihaad against the self).”
According to Sheikh Abdullah Azzam (rh) this hadith is fabricated. The greatest Jihad is Jihad bil Saif/ Jihad qital!
This hadith has been declared weak and false by others also,In no way can this hadith be used to compare jihad(fighting in the way of allah) and fighting against the nafs, the hadith is often mis-qouted to try to make the real jihad seem not that important,
for arguments sake even if this hadith were true the rasool (Saww) only said it AFTER RETURNING FROM THE BATTLEFIELD OF BADR he didnt use it to abrogate or invalidate jihad like the way some modernists do!
so with this in mind it appears to be applicable only to those returning from their patrols in afghanistan or iraq or chechnya. (not guys coming back from the khanqa)
This hadeeth also contradicts clear verses of the Qur'an. Allah the Mighty, the Majestic, says, (Translation of the Meaning),
"Not equal are those of the believers who sit (at home), except those who are disabled (by injury or are blind or lame, etc.), and those who strive hard and fight in the Cause of Allah with their wealth and their lives. Allah has preferred in grades those who strive hard and fight with their wealth and their lives above those who sit (at home). Unto each, Allah has promised good (Paradise), but Allah has preferred those who strive hard and fight, above those who sit (at home) by a huge reward; Degrees of (higher) grades from Him, and Forgiveness and Mercy. And Allah is Ever Oft'Forgiving, Most Merciful."
Qur'an (4:95-96)
A man asked Rasulullaah (s.a.w): "..and what is Jihad?" He (s.a.w) replied: "You fight against the disbelievers when you meet them (on the battlefield)." He asked again: "What kind of Jihad is the highest?" He (s.a.w) replied: "The person who is killed whilst spilling the last of his blood." [Narrated by Ahmad in his Musnad 4/114 - Hadith sahih. Al Haithami states: "Narrators upheld it." Majmauz Zawaid 1/59].
In the end I have a Question for them who uses this hadith very often when they talk about jihad
if leaving behind your family, your wife, your children, your friends, your wealth, your comforts, your security, your soft beds and furnished homes, your running water, your food and drink, your careers, your comfortable mosques, your country, and all the other comforts associated with your lives.......
is not jihad of the nafs then what is jihad of Nafs?
And Allah knows Best