Just as Eliwood and his party were leaving the Shrine of Seals, they encountered Nergal, fully healed and more powerful than ever. He demanded that Eliwood hand over Nils and Ninian on pain of death; Ninian volunteered to be taken hostage in exchange for Nils' freedom. Nergal agreed, and he struck Eliwood down when Eliwood objected. If not for Athos' protection, Eliwood might have died then and there.

More determined to stop Nergal than ever, Eliwood ventured into a cavern near Ostia, where the ghosts of Roland and his most trusted soldiers guarded Durandal, the Blazing Blade. Eliwood defeated the ghosts of the soldiers and obtained Durandal with Roland's blessing. Outside the cave, he was accosted by a huge dragon of ice. Before he could think to do otherwise, he took up Durandal and struck down the creature. Nergal appeared again and informed him that the dragon was none other than Ninian, who had transformed and fled again rather than obey Nergal's commands. She transformed back into her human form just long enough to say goodbye to Eliwood before dying in his arms. Athos fought Nergal, barely injuring him at all, and Nergal retreated with one last insult on the great man Athos once was, and the path that the two of them had once traveled together.

Exhausted and grief-stricken, Eliwood and his friends set out for Castle Ostia, where they planned to rest in preparation for the final attack on Nergal. Their rest was interrupted by a band of Nergal's morphs who had infiltrated the castle and delivered a message from Nergal: "I await you on the Dread Isle." Athos realized that he would need more time to obtain certain other Divine Weapons and alert Bramimond to the threat that Nergal posed to Elibe, but Eliwood was eager to set forth for the Dread Isle and take the fight to Nergal's morphs before he could attack again. Eliwood left Durandal in Athos' care, knowing that they would meet again at the Dragon's Gate, and that when they did, he would not hesitate to take up his ancestor's Divine Weapon again.

Eliwood sailed to the Dread Isle a second time and destroyed most of the morphs guarding the Dragon's Gate before Athos arrived. Together they fought through the reanimated bodies of Lord Darin and the most powerful members of the Black Fang before confronting Nergal himself. With his dying breath, Nergal opened the Dragon's Gate and called three Fire Dragons through.

At that moment, Bramimond arrived and used his magic to restore Ninian to life; with her icy magic she subdued two of the dragons before collapsing from exhaustion, leaving it up to Eliwood and his friends to defeat the third. After the battle, knowing that Elibe would never be safe as long as the Dragon's Gate remained open, Nils stepped through the portal to close it from the other side.