Yes, the story is mentioned in Karna Parva of Mahabharata. When Arjuna and Karna were engaged in war, the snake Aswasena (whose mother has been burned by Arjuna in Khandava Vana), has entered at the arrow of Karna. Karna has fired that arrow without seeing that snake but Lord Krishna has pressed the chariot down in earth in some extent. Thus, Arjuna has been saved by Lord Krishna but his diadem has been destroyed.
The Suta's son then fixed on his bow-string that foe-killing, exceedingly keen, snake-mouthed, blazing, and fierce shaft, which had been polished according to rule, and which he had long kept for the sake of Partha's destruction. Stretching his bow-string to his ear, Karna fixed that shaft of fierce energy and blazing splendour, that ever-worshipped weapon which lay within a golden quiver amid sandal dust, and aimed it at Partha. Indeed, he aimed that blazing arrow, born in Airavata's race, for cutting off Phalguna's head in battle. All the points of the compass and the welkin became ablaze and terrible meteors, and thunderbolts fell. When that snake of the form of an arrow was fixed on the bow-string, the Regents of the world, including Sakra, set up loud wails. The Suta's son did not know that the snake Aswasena had entered his arrow by the aid of his Yoga powers. Beholding Vaikartana aim that arrow, the high-souled ruler of the Madras, addressing Karna, said, "This arrow, O Karna, will not succeed in striking off Arjuna's head. Searching carefully, fix another arrow that may succeed in striking off thy enemy's head." Endued with great activity, the Suta's son, with eyes burning in wrath, then said unto the ruler of the Madras, "O Shalya, Karna never aimeth an arrow twice. Persons like us never become crooked warriors." Having said these words, Karna, with great care, let off that shaft which he had worshipped for many long years. Bent upon winning the victory, O king, he quickly said unto his rival, "Thou art slain, O Phalguna!" Sped from Karna's arms, that shaft of awful whizz, resembling fire or the sun in splendour, as it left the bow-string, blazed up in the welkin and seemed to divide it by a line such as is visible on the crown of a woman dividing her tresses. Beholding that shaft blazing in the welkin, the slayer of Kamsa, Madhava, with great speed and the greatest ease, pressed down with his feet that excellent car, causing it to sink about a cubit deep. At this, the steeds, white as the rays of the moon and decked in trappings of gold, bending their knees, laid themselves down on the ground. Indeed, seeing that snake (in the form of an arrow) aimed by Karna, Madhava, that foremost of all persons endued with might, put forth his strength and thus pressed down with his feet that car into the earth, whereat the steeds, (as already said) bending down their knees, laid themselves down upon the earth when the car itself had sank into it. Then loud sounds arose in the welkin in applause of Vasudeva. Many celestial voices were heard, and celestial flowers were showered upon Krishna, and leonine shouts also were uttered. When the car had thus been pressed down into the earth through the exertions of the slayer of Madhu, the excellent ornament of Arjuna's head, celebrated throughout the earth, the welkin, heaven, and the waters, the Suta's son swept off from the crown of his rival, with that arrow, in consequence of the very nature of that snaky weapon and the great care and wrath with which it had been shot.
When Aswasena has been failed in doing any harm to Arjuna, he requested Karna to fire him once more at Arjuna by arrow. But Karna has refused to do so.
Having burnt the gold-decked diadem of Arjuna displayed on his head, he desired to come to Arjuna once more with great speed. Asked, however, by Karna (who saw him but knew him not), he said these words, "Thou hadst sped me, O Karna, without having seen me. It was for this that I could not strike off Arjuna's head. Do thou quickly shoot me once again, after seeing me well. I shall then slay thy foe and mine too." Thus addressed in that battle by him, the Suta's son said, "Who are you possessed of such fierce form?" The snake answered, saying, "Know me as one that has been wronged by Partha. My enmity towards him is due to his having slain my mother. If the wielder of the thunderbolt himself were to protect Partha, the latter would still have to go to the domains of the king of the pitris. Do not disregard me. Do my bidding. I will slay thy foe. Shoot me without delay." Hearing those words, Karna said, "Karna, O snake, never desires to have victory in battle today by relying on another's might. Even if I have to slay a hundred Arjunas, I will not, O snake, still shoot the same shaft twice." Once more addressing him in the midst of battle, that best of men, viz., Surya's son, Karna, said, "Aided by the nature of my other snaky weapons, and by resolute effort and wrath, I shall slay Partha. Be thou happy and go elsewhere."
Then Aswasena has assumed the form of arrow and attacked on Arjuna but later killed by Arjuna.
Thus addressed, in battle, by Karna, that prince of snakes, unable from rage to bear those words, himself proceeded, O king, for the slaughter of Partha, having assumed the form of an arrow. Of fierce form, the desire he ardently cherished was the destruction of his enemy. Then Krishna, addressing Partha in that encounter, said into him, "Slay that great snake inimical to thee."
Then Jishnu, turning his face in rage, cut off, with six keen shafts, that snake in the welkin as the latter was coursing in a slanting direction. His body thus cut off, he fell down on the earth.