The Living Castle was the main tower of the Fortress of Ashida. For the entire game, the Samurai Warlord is seen in his dojo inside, plotting his next moves aganist Hiro and his friends.
Close to the final level, the Warlord uses his magic to animate the gigantic castle, with Hiro barely making it inside. Eventually however, Hiro is able to navigate the battered insides to the Samurai Warlord's room in the castle, where the final battle takes place. After which, the castle falls apart without the Kuji magic needed to animate it.