Duryodhana dies

With great effort, Duryodhana raised himself a bit, supporting himself on his elbows. He wanted to see the heads of the Pandavas. Aswatthama gave him the bundle. Duryodhana picked the head that resembled Bhima, crushed that with his fists. The head broke. He was surprised. He then hit the other heads which easily broke.
Duryodhana said these are not the Pandavas. The head that could withstand the blows of maces could not so easily crush with his fists.
He then said to Ashwatthama - You have killed the sons of Draupadi and thus not left anyone alive in our Kuru dynasty.

Grieving, Duryodhana died.

Ashwatthama said I had promised that I will kill the Pandavas. I still have the weapon of Brahma. I will use that on the Pandavas.

The sun was about to rise. Seeing that, the three went and hid somewhere.

Ashwatthama enters the Pandava camp

Shiva said that would not possible.
Ashwatthama said In case that he would kill himself there in front of Shiva.
Shiva relented. Ashwatthama then asked for the sword of Shiva. Shiva gave that and vanished.
Ashwatthama asked Kripa to guard the gate and kill anyone who tried to escape, while he went inside.

Ashwatthama saw Dhristadyumna sleeping. He caught him. Dhristadyumna, waking up asked Ashwatthama to fight with him and let him fight, and not just cut off his head.
Ashwatthama said you killed my father and I will kill you like an animal. Dhristadyumna pleaded with Ashwatthama, asking for a chance to fight.
Not listening to him, Ashwatthama started kicking and hitting Dhristadyumna. He kept hitting him till all his bones were broken.

A big noise broke out in the camp. The ones who tried to escape were killed by Kripa and Kritavarma.

Ashwatthama saw the five sons of Draupadi. In the dim light, thinking they were the Pandavas, Ashwatthama cut off their heads. Thinking the Pandavas had been killed, he collected their heads and tied that in a bundle.

He then attacked Shikhadi and killed him also.

he then came out and said he had done his job. The Pandavas were dead.

They went to Duryodhana and there Ashwatthama said I have killed your enemies. The Pandavas are dead.

Ashwatthama meets Shiva

Ashwatthama got angry hearing the words of Kripa. He said he would go ahead with his plan, and if none would come with him, then he would go alone. He would kill the son of Drupada and the Pandavas in their camp. Any one who came to their rescue would also get killed. I have promised the king that I will do so, and I will make sure I succeed. Also, the day Dhristadyumna killed my father, I promised myself that I would kill him.
Kripa was quiet.
Ashwatthama went near the camp, with Kripa and Kritavarma following him.
Near the camp they saw a person. He was covered in ashes and had matted hair. With a two headed drum in hand, he was wearing tiger skin. This was Shiva who was acting as the doorkeeper. He asked Ashwatthama not to go inside. Ashwatthama said he would go and asked the person to step aside.
Shiva said I am the doorkeeper here and you will need to fight me to get inside.
Angry Ashwatthama started shooting arrows which were all swallowed by Shiva.
Ashwatthama realized that this was not any ordinary person.
He said You do not seem to be in pain after swallowing my weapons. My quiver is empty but you are standing peacefully. Please tell me Who are you?
Shiva revealed his identity.
He then said He would stay there till he was instructed to leave.
Not knowing what to do, Ashwatthama built a Shiva Linga with sand and started worshiping that.

Shiva pleased asked Ashwatthama what he wanted. Ashwatthama said he wanted Shiva to leave.

Ashwatthama plans to kill the Pandavas

Ashwatthama along with Kripacharya and Kritavarma then left in the night for the Pandava camp. They groped their way and then sat below a tree. There they saw an owl devouring the sleeping birds. Seeing this Ashwatthama said - This is the way to kill the Pandavas.
Kripa said this was not the correct way to kill an enemy. A sleeping enemy was not to be attacked. Duryodhana brought about this condition by not listening to advice, and you are doing the same now. You want to defeat the Pandavas, ask for a war and fight. If you are not convinced, let us talk to Dhritarashtra and see what he says.

Ashwatthama made commander

Janmajeya asked - What happened after this?
The sage said -

Ashwatthama, son of Drona, came to Duryodhana. He said - You made a bad choice of making Bhishma, Drona, Karna, Shalya as commanders. If you had made me the commander, I would have won the war for you by now. Make me the commander now and I will kill the Pandavas for you.

Duryodhana said I realize now that the others were close to the Pandavas. I make you the commander. Go and kill the Pandavas for me.

Duryodhana asked Kripa to fetch some water. With the water, Duryodhana declared the son of Drona as the commander of the army of Kauravas.