A Part I arc covering Orochimaru's invasion of the Hidden Leaf, built around the Third Hokage's fatal duel with his former student and Naruto's clash with a rampaging Gaara.
Set during Part I, this arc depicts Orochimaru's attempt to raze Konohagakure. It runs through volumes 13 to 16, chapters 116 to 138, and episodes 68 to 80 of the original Naruto anime. It follows the Chūnin Exams and precedes the Search for Tsunade. Two struggles dominate the storyline: the Third Hokage against Orochimaru atop the arena, and Naruto against Gaara in the surrounding forest.
As Suna and Oto forces pour into the village behind giant snakes, Orochimaru, posing as the Fourth Kazekage, takes the Third Hokage hostage and traps them both within a barrier. Shedding the disguise, Orochimaru reanimates the First and Second Hokage to fight their old successor. Realising conventional attacks are useless against the revived dead, Hiruzen resorts to the Dead Demon Consuming Seal, ripping out the souls of his predecessors and then seizing Orochimaru. Though he cannot fully draw out his student's soul, he seals away Orochimaru's arms, robbing him of jutsu forever, and dies with a smile as the invasion collapses.
In the forest, Sasuke pursues Gaara, Kankurō, and Temari, with Shikamaru, Naruto, Sakura, and Pakkun following. Shikamaru holds off a squad of Oto ninja until Asuma arrives, while Shino intercepts Kankurō. Gaara's monstrous transformation overwhelms an exhausted Sasuke, and Naruto steps in, using Gamakichi and a growing army of shadow clones to wear him down. When Gaara becomes the full Shukaku, Naruto summons Gamabunta and, tapping the fox's power, lands a decisive headbutt that ends the beast and settles their duel.
Rather than harm his beaten rival, Naruto tells Gaara that he too once knew the ache of loneliness but found people who gave him purpose, planting the seeds of Gaara's change of heart. The Sand siblings retreat with their brother, who apologises to them for the first time, while the Oto and Suna forces flee the village. Konoha gathers to mourn, and days later, at the Third Hokage's funeral, its shinobi vow never to forget his sacrifice.

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During the Konoha Crush, Orochimaru invades the Hidden Leaf while disguised as the Fourth Kazekage, traps and kills the Third Hokage in a duel, and Naruto fights off a rampaging Gaara in the forest outside the village.
The Third Hokage, Hiruzen Sarutobi, fights Orochimaru, who reanimates the First and Second Hokage against him. Hiruzen uses the Dead Demon Consuming Seal to seal away Orochimaru's arms, dying in the process.
Naruto wears Gaara down using Gamakichi and an army of shadow clones, and once Gaara transforms into the full Shukaku, Naruto summons Gamabunta and taps into the Nine-Tails' power for a decisive headbutt that ends the fight.
The Konoha Crush arc follows the Chunin Exams and is followed by the Search for Tsunade.
Yes, the Third Hokage dies in the Konoha Crush arc after using the Dead Demon Consuming Seal against Orochimaru's reanimated predecessors, sealing away Orochimaru's arms before passing away.
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