The Sexy Technique is simply a Transformation Technique used to transform the user into a beautiful, nude woman in a very seductive pose with mists of smoke covering her privates, or in a bathing suit. Naruto uses this technique to distract or win over men, sometimes leading to an exaggerated nosebleed by the victim or even unconsciousness, while Konohamaru mainly uses it to impress Naruto. Some men have been able to resist this technique.
After Naruto returned in Part II, he bragged that he has upgraded this jutsu, which he referred to as the "new-and-improved" version of this technique, but he was punched into the distance by Sakura before he had the chance to perform it. We eventually see Naruto performing the upgrade in front of Jiraiya, taking place during the time-skip.
The woman Naruto transforms into when he uses the Sexy Technique has been dubbed "Naruko" by the fandom, inspiring many pictures of fanart and fan fiction.
In the fandom, the Sexy Technique has been used on various characters of the series as a source for fanart. It is popular in both fanart and convention cosplay (allowing female cosplayers to play male characters, e.g. ("crossplay")).