Narakasura was the son of Hiranyaksha and a mighty asura with a big kingdom and power. The capital of his kingdom was Pragjyotishpura ( near Guwahati). He had a special weapon known as Vaishnavastra, and he used it against, gods, kings, and his own people. He had even taken Indra’s royal accessories.
An astrologer once told Narakasura that if he can imprison 16000 women, he will become invincible.
Hearing this prediction, Narakasura immediately started to kidnap girls and imprison them. Whoever objected was ruthlessly killed.
Indra felt helpless and went to Krishna asking for help.
Krishna agreed to help and his wife Satyabhama accompanied him. Krishna travelled on Garuda to Pragjyotishpura and blew his conch- to announce his presence to the helpless and to declare a war.
Narakasura sent many general to fight Krishna but they all failed. Finally, Narakasura decided to fight Krishna himself.
The face off was fierce. At the end Satyabhama wounded Narakasura using a bow and arrow, and Krishna took this opportunity to kill him.
Krishna had to use all his weapons to defeat Narakasura. This is the only avatar where Krishna used his weapons as well as those of Vishnu. He used the Sudarshan Chakra (which he received from Vishwakarma), Panchajanya ( which he obtained from killing an asura), the mace Koumodiki, the sword Nandaka and his bow and arrow Sharanga.
As Krishna killed Narakasura, some of the blood splashed on Krishna’s body.
Krishna then instructed the son of Narakasura to immediately release all the imprisoned women.
When the women saw Krishna, they said that they wanted to live in Dwarka so they may be always near to their savior. Krishna agreed. (I feel that’s the story we were told as kids that Krishna has 16000 wives.)
At the end of the day, Krishna took an oil bath to remove the blood from his body. Later Krishna returned to Dwarka. It was the 14th day from Amavasya, a moonless night.
Today we celebrate this day as Diwali. Even today people take oil bath on this day to indicate the cleansing of our bodies and souls.
This is one of the many stories behind the celebration of Diwali.