Bhishma means He of the terrible oath, referring to his vow of life-long celibacy. Originally named Devavratha, he became known as Bhishma after he took the bhishan pratigya ('terrible oath') — the vow of life-long celibacy and of service to whoever sat on the throne of his father (the throne of Hastinapur). He took this oath so that his father, Shantanu could marry a fisherwoman Satyavati — Satyvati's father had refused to give his daughter's hand to Shantanu on the grounds that his daughter's children would never be rulers as Shantanu already had a son in Devratha. This made Shantanu despondent and upon discovering the reason for his father's despondency, Devratha sought out the girl's father and promised him that he would never stake a claim to the throne, implying that the child born to Shantanu and Satyavati would become the ruler after Shantanu. At this, Satyavati's father retorted that even if Devratha gave up his claim to the throne, his (Devratha's) children would still claim the throne. Devratha then took the terrible vow of life-long celibacy, thus sacrificing his 'crown-prince' title and denying himself the pleasures of intercourse. This gave him immediate recognition among the gods and his father granted him the boon of Swachhanda Mrityu (control over his own death — he could choose the time of his death, but he was not immortal). Bhishma also took another vow shortly after the marriage of Shantanu and Satayavati. Bhishma vowed he would see his father's image in whoever sat on the throne of Hastinapur and would serve him without question. This vow ended up being the main cause of his problems later on when his nephew Dhritarashtra took the throne and wished to make his own son, Duryodhana the crown prince instead of Dhritarashtra's brother Pandu's son Yudhishtira who was the elder to Duryodhana (and reckoned by all to be the most worthy to become king). As a result Bhishma was forced to comply with all of Dhritarashtra's orders no matter what injustice was done to the Pandavas.
Bhishma was a great archer and a warrior. In the process of finding a bride for his half-brother the young king Vichitravirya, Bhishma cleverly abducted princesses Amba, Ambika and Ambalika of Kashi (Varanasi) from the assemblage of suitors at their swayamvara. Salwa, the ruler of Saubala, and Amba (the eldest princess) were in love. Upon reaching Hastinapura, Amba confided in Bhishma that she wished to wed Salwa. Bhishma then sent her back to Salwa who turned her down as it was humiliating for a man to accept a woman who had been so long in the company of another man. She then naturally approached Bhishma for marriage who refused her, citing his oath. Amba, humiliated and enraged beyond measure, vowed to avenge herself against Bhishma even if it meant being reborn over and over again.
Legend has it that at her maternal grandfather's suggestion Amba sought refuge with Parasurama who ordered Bhishma to marry Amba. Bhishma politely refused saying that he was ready to give up his life at the command of his teacher but not the promise that he had made. Upon the refusal, Parasurama called him for a fight at Kurukshetra. At the battlegrounds, while Bhishma was on a chariot, Parasurama was on foot. Bhishma requested Parasurama to also take a chariot and armor so that Bhishma would not have an unfair advantage. Parasurama blessed Bhishma with the power of divine vision and asked him to look again. When Bhishma looked at his guru with the divine eye-sight, he saw the Earth as Parasurama's chariot, the four Vedas as the horses, the Upanishads as the reins, Vayu (wind) as the Charioteer and the Vedic goddesses Gayatri, Savitri & Saraswati as the armor. Bhishma got down from the chariot and sought the blessings of Parasurama to protect his dharma, along with the permission to battle against his teacher. Parasurama was pleased and said to Bhishma that if he had not behaved in this manner, Parasurama would have cursed him, for it is the duty of warriors who fight against elders to not abandon the traditions of humility and respect for elders. Parasurama blessed him and advised him to protect his dharma of brahmacharya as Parasurama himself must fight to fulfil his dharma of fighting to uphold his word as given to Amba. They fought for 23 days without conclusion — Parasurama was chiranjeevi (immortal) and Bhishma had a boon that let him choose the time of his death. Two versions exist about how their battle came to and end.
As per one, On the 22nd night, Bhishma prayed to his ancestors to help him end the battle. His ancestors gave him a weapon which was not known to Parasurama. They told him that it would put Parasurama to sleep in the battlefield. A person who sleeps in the battlefield is considered to be dead as per Vedas. They advised Bhishma to call back the weapon at the end of day after sunset so that Parasurama will come back to his sense and that shall bring the end to war. However the weapon was never used as Bhishma walked out of the war.
As per the other version, on the 23rd day, Bhishma summoned the infallible celestial weapon(astra) Prashvapastra, the method of using which was known to him and him alone. Neither did a counter-attack exist, nor was a defense against it known to Parasurama. As Bhishma mounted the astra on his bow, a divine voice (ākāshavānī) implored Bhishma not to fire the weapon as its use would lead to the humiliation of Bhishma's guru(Parasurama himself). Bhishma refrained from using the weapon that would have brought him certain victory. Upon witnessing this, Parasurama was overcome with adulation for his disciple and proclaimed Bhishma as the victor.
Parasurama thus told Amba that he could not win over Bhishma and gave her the boon of "mahakal shiva". Amba did penance to please Lord Shiva. Shiva gave her the boon that she would be instrumental in the death of Bhishma. Amba would later be reborn as the eunuch prince Shikhandi in the household of king Drupada.