Episode 3 of The Haunted Palace opens with Yeo-ri praying to locate Yoon Gap’s soul, while at the same time, the possessed Crown Prince vomits out Yoon Gap, allowing him to escape. However, the 8-foot ghost quickly appears and captures Yoon Gap once again, just as Yeo-ri tries to reach him. Gangcheori intervenes, explaining that Yeo-ri’s prayer offered only temporary relief— the 8-foot ghost remains far too powerful to be defeated so easily.

At the Queen Mother’s residence, the Blind Shaman reveals a chilling truth: the 8-foot ghost will not leave until the Crown Prince is dead. Although troubled, the Queen Mother clearly prioritizes Prince Yeong-in’s safety over the Crown Prince’s life. Meanwhile, the Blind Shaman ponders what had earlier provoked the 8-foot ghost.

Elsewhere, tensions rise between Yeo-ri and Gangcheori. Furious that he kept knowledge of the 8-foot ghost from her, Yeo-ri distances herself. Gangcheori, in turn, accuses Yoon Gap of trying to manipulate her into exorcising the ghost. Seeking distraction, Yeo-ri launders Yoon Gap’s clothing, where she finds a bracelet and recalls a bittersweet memory: giving Yoon Gap a longevity cord and his promise to return to her. Heartbroken, she mourns the meaninglessness of that promise.

Gangcheori mistakenly believes that Yeo-ri has given up on saving Yoon Gap. But the next morning, she’s gone, and despite Mrs. Yoon’s attempts to delay him with breakfast, Gangcheori rushes off to find her.

Meanwhile, Yeo-ri devises a risky plan. At the royal workshop, she discovers the ghostbane stone and makes a deal with the Drowned Ghost: revenge in exchange for information. Using water magic, she haunts Prince Yeong-in during his playtime, forcing him to confront the Drowned Ghost’s vengeance. A flashback reveals Yeong-in’s past atrocities against her, explaining her tragic suicide. After tormenting him, Yeo-ri mercifully releases him, but not before seeing a chilling vision of his corpse.

Moved by Yeo-ri’s request to avoid worsening her karma, the Drowned Ghost reveals the location of the Crown Prince’s laundry—an important clue for Yeo-ri’s next move.

While Gangcheori clumsily searches for her, even getting into fights with the royal tailor and Head Eunuch Kim, Yeo-ri works on a plan to bait the 8-foot ghost using the Crown Prince’s clothing. Equipped with the King’s ghostbane stone lenses, she prepares for a dangerous encounter.

Gangcheori eventually overhears that Yeo-ri stole the lenses and realizes something serious is about to happen. As the Crown Prince hears a mystical bell, he breaks free of his guards and finds Yeo-ri, who pretends to offer her loyalty. However, the Crown Prince sees through her deception and attacks.

Gangcheori arrives just in time, but so does the King. The situation escalates dangerously: as Yeo-ri attempts to exorcise the ghost, a guard fires an arrow at her, but Gangcheori shields her and takes the hit. At that exact moment, the Blind Shaman senses a shift—the 8-foot ghost finally exits the Crown Prince.

However, there’s no time to celebrate. The protection boundary shatters, and the 8-foot ghost immediately possesses King Lee instead. The Haunted Palace Episode 3 ends with the newly possessed King charging toward Gangcheori, setting up an intense confrontation to come. For more recap, click on the link below.

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