The war started not long after the system of one shinobi village per country was established by the founding of Konohagakure. To try and maintain a balance of power, the First Hokage divided the tailed beasts among the other five villages when he began his peace talks with them. However, this was not enough to prevent the war, and may have actually increased hostilities.
The Second Hokage died during this war, while fighting against Kumogakure's Kinkaku Force, sacrificing himself as a decoy in order for his subordinates to escape. Before doing so he selected Hiruzen Sarutobi for the position of Third Hokage.