The tentacled and cloven-hoofed demodrgaon is a powerful two-headed dragon created by and enslaved by Venger's sorcery. Dungeon Master describes it as "a terrible creature; half demon, half dragon, who's power could devestate the Realm." Its red head breathes fire and its blue head breathes icy blasts, and were responsible for burning the Wondrous Wood and freezing the Alicorn River.
Venger commands it to attack Tardos Keep in the hope that Queen Sulinara will use some of the dragonbane herb against it, so that he can then salvage the dragonbane and use it to defeat Tiamat the dragon. The demodragon steals the heroes' totems but their enchantments clash with his sorcery and disrupt the spell used to enslave the monster.
The demodragon rampages, and in a bid to salvage their totems the heroes make a truce with Venger who betrays them by sending them to confront it with a powerless talisman. The demodragon is defeated when it grabs Uni who is unknowingly wearing a dragonbane garland given to her by Dungeon Master who was in the guise of a gardener. The demodragon glows spectacularly and disappears when accidentally touching the garland.