After the feast in Dragonfell the party goes to sleep and they all have strange, and vivid dreams of some kind of mysterious tower. The next morning they discover that the town of Ulder has been completely razed to the ground. General Tyra mentions strange shadow like creatures in the city, who were impervious to weapon attacks and who devoured the townsfolk whole.
While trying to discover what might have happened, they speak with the Odd Mysterious merchant they have been dealing with and he tells them that the Tower of Fate is being prematurely opened by someone or something, and that that people are being transformed into Shadows, reflections of their negative selves. He offers to aid them in awakening the strength within them, their Personas, if they wish, but they will have to bear all their dark secrets for their friends to bare.