A large, deep sea creature that inhabits the ocean surrounding the Ship Graveyard some distance from Nirva Island. It appears as a gigantic blue dragon/seahorse looking creature, towering high above the average height of humans. It has a rainbow pattern on its fins, as well as four additional appendages resembling arms. While being an apparent aquatic creature, it has shown ability to remain out of the water for some time, leading one to believe that it is either an air breathing creature, or it can breathe in and out of water equally.
The Dagon was encountered in the Ship Graveyard, near the lost Island Nations ship, the Kerzalik. The creature is either inherently hostile, or just a large predator, since it doesn't have any clear reasoning or intelligence for attacking the Prince and his company. Dagon charges the party when they emerge from one of the many grounded ships. Yahr speculates that this creature is the cause behind the existence of the Ship Graveyard, rather than the surrounding reefs, although this can't be proven for a fact. The creature puts up a formidable fight, but the Prince, Lyon, their company, and the Island Nations soldiers Bernadette, Yahr and Nelis were finally able to put it down for good.
There is a possibility that the creature was drawn to the power of the Rune Cannon, the party's reason for being there, but that remains unconfirmed. There is nothing to prove that the Dagon was there by any effort of the pirates, who had their eyes on the Rune Shells on the Kerzalik. On the contrary, it is highly likely that the pirates were stranded at the Ship Graveyard because of the Dagon attacking their ship.
If the party makes a return trip to the Ship Graveyard, a similar creature, Hydra, may be encountered in the same area where Dagon was found. Hydra is a darker colored, stronger version of Dagon. Yahr exclaims that it is impossible that Dagon could have survived the rune cannon blast, speculating that there is likely a whole species of large aquatic carnivores in the area, or the initial creature had the means of regenerating a lost head