Phantom Hill is a place in Lakeland. Since Battler has forced Felicia to lift Lagoon Castle up into the clouds, Nasir is attempting to reach the castle by breaching the mountain tops, jumping off to the clouds and then proceed into the Lagoon Castle to save the princess. On Phantom Hill, Nasir is finally learning about his Twin-Brother whom he had earlier encountered during his adventure.

Phantom Hill is the second Point of no return in the game, once teleported to this area, Nasir cannot go back and visit any of the previous shops or dungeons. Because of this, it is adviced to stock-up on items like Elixir and other equipments before summoning the Nymph Angels.

On Phantom Hill, Nasir is confronting Ella for the last time, dispatching her for good. On the top of the mountain, Nasir is confronted by Zerah who is giving him a lesson about his fourthcomings, before being surprised by Mathias. After a minor confrontation, both of them are exhausted and falls to the ground. While Zerah is teleporting himself to the castle, Mathias explains why things have developed the way they did. He tells Nasir to stop Zerah and rescue the princess and then uses his magic to teleport him to the clouds, after giving Nasir the last Magic Crystal.