During Riku's visit to Muppet Studios, audience members have been mysteriously disappearing during the Muppets' performances (a phenomenon Statler and Waldorf humorously attribute to the poor quality of the Muppets' show itself). Riku and Kermit later discover the source - the curtain itself was turned into a Heartless by the source of darkness underneath the theater, along with the darkness in the late Tex Richman's heart. Riku and Kermit defeat the Heartless on the Muppets' stage, and all the lost audience members reappear with their hearts restored. The audience members applaud Riku and Kermit for giving the best performance yet.
The Curtain Ghost resembles a large, red curtain in the shape of a stereotypical ghost. It has spindly, bizarre arms and legs that slightly resemble the Trickmaster from previous games, and holds a marionette crossbar in one arm. It has two glowing yellow eyes and a jagged mouth. The Heartless emblem is situated on its forehead. It also has the ability to turn invisible during the fight.
- Mysterious Fire: Engulfs itself in flames and charges around the stage.
- Mysterious Thunder: Summons lightning bolts from the sky.
- Puppeteer: The Ghost will turn invisible and fly above the stage. From above, it manipulates marionette versions of various Heartless, such as Shadows, Soldiers and Large Bodies. Riku must defeat the puppets to make the main boss reappear. Occasionally, the real Gonzo will be found among its marionettes, who comments on how unusually fun he finds being controlled like a puppet. Gonzo will release HP, MP and Drive orbs after being made to attack Riku and Kermit.
More to come
- After defeating the Curtain Ghost, Riku receives an additional Fire Element and his version of the "Electric Mayhem" Keyblade.
- The Curtain Ghost uses "The Corrupted" as its battle theme.