The Palace of Shadow is the final area that Mario and his comrades visit in Paper Mario: The Thousand-Year Door, where the Shadow Queen resides. It is found behind the Thousand-Year Door.
In this palace, the Shadow Queen possesses Princess Peach, who Sir Grodus had delivered to her. Mario and co. drudged through the palace and its inhabitants, including the middle sibling in the "tail" family, Gloomtail. Mario and co. later fought with the Shadow Sirens, who now consisted of Beldam, Marilyn and Doopliss. Soon after, Mario and company finally made it to the Shadow Queen's lair, where Sir Grodus was. Mario and his party fought Sir Grodus here, and after defeating him, and both King Bowser and Kammy Koopa, Sir Grodus retreats to the back to give Princess Peach as an offering to the Shadow Queen. After Grodus awakens the evil Queen, Mario and company engaged into battle with the Queen, but the Shadow Queen found Peach's body too weak and used her true form to destroy Mario and company. The Crystal Stars scattered throughout to where they were found and let everyone know Mario and his team were in trouble and sent their positive thoughts and wishes to them. Peach managed to break out of the evil Queen's control and replenished Mario and his team's HP, FP and Star Power. Mario and co. defeated the Shadow Queen and released Peach from her control.