Having restored Ballymolloy, the Hero and his friends set off to find more islands in the world after a brief respite. They return to the Shrine of Mysteries having collected several more fragments, and place them on another pedestal. Pulled through time once more, the party sees a vision of a volcano erupting and causing widespread panic. They make for the village and find that it is preparing for a festival to honour a deity called "Father of the Flame", whom they believe to be the patron god of Emberdale and the source of the village's endless supply of fire and heat. The Gaffer, the village chief, explains that the festival is known as the Return of Fire Ritual, in which they make a pilgrimage up the volcano, called Burnmont, to return the flame to its core. He invites the party to stay.
On the eve of the festival, the party wakes to a commotion. The villagers are gathered before Palmela, the town's clairvoyant. She tells everyone that the volcano will erupt. The Gaffer comes outside and brings both Palmela and the party inside his house. At the Gaffer's house, Palmela presses the Gaffer to cancel this year's festival because she has foreseen a terrible event at the conclusion of the festival. The Gaffer does not believe her prediction, and decides to continue the festivities.
The group enters Palmela's house and talks to her. She says that they need to help the people because she predicts that Burnmont will erupt on the day of the festival. They agree to help, and on the day of the festival, they trek to Burnmont. After throwing their flames into the volcano, the party goes to Palmela, who charges them to explore the volcano to find out what is the cause of the eruption.
While investigating, the party discovers a monster, the Glowering Inferno, at the bottom of the volcano that collects the flames from the torches that the villagers throw at the volcano. They defeat the monster, but it unleashes a trump card in its death throes, creating a black flame that seemingly cannot be extinguished. Palmela gets a vision that someone close to the Hero may have the solution. Surely enough, Pike has some mysterious phial he cannot pawn off, full of wholly holy water. Pike gives it freely after the party explains what has happened. Returning with the phial, the Hero pours it on the dark flames and they dissipate, averting what would have been certain disaster.
The next morning, they visit Palmela who gives them a Blue Fragment.
Later on, after defeating the Rainiac in Greenthumb Gardens, the party, along with a new member returns to Emberdale in order to get Palmela to create medicine that can be used to cure Carraway, who has become gravely ill due to being exposed to the grey rain. Upon entering Emberdale and speaking to the townspeople, it is discovered that a few years had passed since the party had saved the village. After being told about Carraway's condition, Palmela is able to create the medicine needed to cure him.
Some time later, after defeating Togrus Maximus at the Beacon in the Buccanham Region, the Hero, along with two new faces, returns to Emberdale in order the gain a piece of the flame known as the Guiding Light, in order to light the Beacon and restore Buccanham to the world. Upon reentering the town and speaking with the people, it is discovered that a few more years had passed since their last visit, with most of the townspeople having a hard time believing that the hero speaking to them is the same person that had saved them many years ago. After the Gaffer a letter from the king of Buccanham and explaining the situation, the Gaffer allows the group to take a piece of the flame, located inside his house near the front door.
In the present, a hot springs was created underneath the well in Emberdale. Worship of the Father of the Flame has all but disappeared.
Palmela's shop exists in the present as well, but a new Palmela runs it. She can help the party find Mini medals.
After the world has been covered in darkness, they go back to Emberdale to seek the help of Fire Spirit. Palmela travels with them with the Kindling Oil and goes into the core of the volcano. After finding the Fire Spirit, they give him the Kindling Oil. He challenges the party to a fight. After defeating him, he frees Emberdale and Alltrades Abbey from the darkness.
- Emberdale - The town
- Burnmont - The active volcano. The Flame Spirit resides here. In the present, there is a warp that leads to the Shrine of Mysteries.
- Palmela - Refers to two clairvoyant women in both the past and the present.
Emberdale has a Yorkshire dialect.
- At Burnmont, the player is on a semi-time limit. Every time they traverse steps three times, another villager throws their flame into the volcano. When the last villager throws their flame inside the volcano, it will erupt, forcing the player to start again at the inn.