As Link returned to the water town of Saria, he strayed off the path into the woods east of Moruge Swamp and north of the river. The dark woods teemed with unfriendly critters, and Link could see the evil eyes of Molblins watching him from the darkness. Link knew that someone must live in these woods, because the Bit in Saria had told him to see his master here. Sure enough, Link reached a bright, cheerful clearing and found a comfortable-looking log cabin.

The rough forest man living out in the woods went by the name of Bagu, and welcomed Link into his home. He treated Link's wounds and gave him directions out of the forest, and before Link left told him to show his note to the river man. Thanking Bagu, Link headed south for Saria, reaching the town before the day was out. Southwards across the river Link could just discern the hostile Death Mountain looming in the distance, and shuddered at the thought of going through its lonely tunnels and torturous landscape. The soldier guarding the river read Bagu's note, and agreed to help Link across since he knew the man. At the flip of a switch, a bridge extended out over the river rapids, and Link marched south to meet Death Mountain.

The twisting tunnels led in and out of the heart of Death Mountain, and Link was faced with many branching paths. Inside the winding caverns Link was besieged by axe-wielding behemoths named Dairas, Ganon's loyal alligator soldiers. He crossed paths with many an Ache and Octorok before finding his way out the other side of Death Mountain, to an area with forests, a lake, and a graveyard. Inside a cave in the side of the mountain, Link found the hidden Hammer, which, as he recalled, was the only tool that could smash roadblocks. Link went back towards northern Hyrule, winding his away around Death Mountain on the eastern shore.

A long bridge led across the ocean to the largest collection of tombstones in Hyrule. In the middle of the graveyard rested the largest grave of all, the King's Tomb. Sensing evil spirits in this place, Link moved cautiously. Dairas guarded areas of the graveyard, and swarms of Moas flew low over the graves - Link could feel himself weakening from the evil forces these ghosts emanated. He finally escaped the graveyard and continued north across the road to the harbor town of Mido.

Link talked to the villagers, trying to glean some information about where to go next. A wise old woman advised Link to find magic in a cave in Moruge Swamp. Link found the door to the church locked, and a woman passing by told him no one was there. She said that the church bell would ring, implying that there was someone inside worth seeing. Taking the hint, Link used the Jump spell to reach the top of the building, and climbed into the bell tower. As he looked through the attic, a swordsman surprised Link. Impressed with Link's sneaking ability, he taught Link the first Art of Sword Fighting: a downwards thrust that would allow him to stab downward when he jumped over an enemy.

Link walked further into Mido and was stopped by a desperate old woman. She begged the hero to help her sick daughter, and Link agreed, remembering about the magic the wise woman had spoken of. He headed to Moruge Swamp in search of this magic, and found a huge boulder blocking a cave deep within the swamp. Link smashed it apart with the Hammer and went inside the cave, where he fought monsters to obtain a bottle of precious Sacred Water. He brought the bottle back to the old woman in Mido, who gasped with surprise.

The water of life! Quick, come with me!

Her daughter was healed instantly, and in gratitude the girl's father, a wise man, taught Link a magic word that would give him power. This word was "Fairy," and invoking this spell would change Link into a fairy for a short time, allowing him to fly.

A young lad told Link that the Island Palace in the south had a raft, but he didn't know how to get there. Another man knew about the hidden palace, and told Link to ask Error of Ruto how to get to it. Link followed the road north to Ruto, smashing roadblocks with the Hammer, until he reached Error's house in Ruto. Error told him,

South of King's Tomb in Mido is a tunnel.

Link dreaded facing the Moas and Dairas of the haunted graveyard, but he had no choice. Starting at the King's Tomb in the center of the graveyard, Link headed due south, walking slowly between the old gravestones. Suddenly, the ground gave way, and Link fell through a tunnel into a hidden cave. Link walked through the damp cavern, despairing of finding a way out, until he saw an exit near the top of the cavern. He couldn't scale the cave wall to reach it, but remembering about the Fairy spell, Link uttered this powerful word and was transformed into a fluttering fairy. He could fly wherever he wished, and he beat his tiny wings to reach the cave's exit.

Link emerged onto a small island dominated by a single mountain. On the other side of this mountain Link found the Island Palace, an imposing red brick structure. The first enemy Link encountered was a huge metal automaton, who used magic to throw iron bars at him and make them return. The iron monster was helpless while his bar flew through the air, and Link chose this time to strike. Fighting masked Stalfos' and dodging flame-throwing Moas, Link found the prize of the palace: a raft which would allow Link to cross the great sea to eastern Hyrule.

The guardian of the Island Palace was Rebonack, a tough blue Ironknuckle astride a flying metal horse. Rebonack held a lance in his cold grip, and charged his legless steed forward to attack Link. Now Link was glad he had been taught the downward thrust. As Rebonack approached, Link jumped up and struck Rebonack with his sword. Rebonack, enraged, charged back and forth across the battlefield, trying to lance the hero, but Link hit him over and over.

Finally, Rebonack was knocked from his horse, and was left with neither lance nor metal beast. But even a blue Ironknuckle alone is a challenge to defeat, for it can throw deadly knives at its enemy. Link fought bravely, and at last victory was his. He put the next crystal into the palace's statue, and left. Looking back at the palace, Link saw that it had turned to stone, indistinguishable from the rest of the mountainside.