War of Blood
The event marking the end of the |Interregnum and the start of the Third Age was the War of Blood. This started when a demon-serving hag sacrificed two twins to create daemonhosts. But the twins, Gromach and Serak survived and thrived. Gromach mastered the jotnar and used its power to gather all the local tribes as well as many surrounding tribes and wage war against all the "civilized" peoples (of all races). This war of tyranny, bloodshed, and demonic rage lasted nearly 50 years and Gromach's empire covered much of eastern Noefra and as far west as what is now Rauviz.
This war also spilled over into Shadow, where pockets of the Waste grew (especially around the empire). The fortress monastery at Lyo Duo (lioh du'oh) fell early on to demonic influence, which drove the cysgoroesi from the battle lines and lead to the breaking of the Pact with Death. Much of the Waste results from this. As does the Great Eastern Dustlands--the land is poisoned by the demonic energies unleashed even in the present, more than 2000 years later.
Only the quest of the First Heroes to the Eternal Library, where they enacted the Third Wish (bringing forth the Old Gods), enabled a change. The surviving First Heroes struck at the fortress at Mt. Fearg, killing Serak and breaking the demon-link and (eventually) banishing the Red Fang (who Gromach had become after surrendering to the jotnar in despair over losing his sister) to the Abyss.
The total death toll of this war is incalculable, but sages of the Old Empire estimated it at multiple millions.