Back in Agrabah, Iago goes down into the palace dungeon to check on Jafar's lamp. To his horror, he sees the Peddler has just rubbed it. Red smoke pours out of the black lamp until a cackling Jafar emerges. When Sora, Donald, and Goofy reach Agrabah, they enter the Peddler's shop, only to find that he has gotten very rich. Aladdin comes in to inform them that Jafar has been freed. Iago tells them that he is in some ruins in the desert, but he seems reluctant to guide them there. Before following him, they find the last Absent Silhouette, which represents Vexen, and they destroy it.
On the outskirts of Agrabah, they find a huge sandstorm blocking the entrance to the ruins. Just as they find themselves wondering what to do, Genie shows up and disposes of the storm with ease — a bit too much ease, in fact, as he is disappointed that he doesn't get to do anything more dramatic. In the ruins, they see a shadowy clone of Jafar. Sora chases it until they find a tower. Inside, Jafar is nowhere to be found. Iago comes clean and confesses that it was a trap and that Jafar threatened him to go along with it. Iago tells them that he's probably at the palace, so they begin to leave, but the ruins begin to collapse. They just barely manage to make it out in time.
Back in Agrabah, they interrogate the Peddler, who explains that Jafar offered to give him treasure in exchange for releasing him from the lamp. When the Peddler did so, Jafar didn't keep his word, but a man in a black coat offered some treasure in exchange for not telling anyone about Jafar's return. The man said that he was going to turn Jafar into a Heartless and then destroy him. After listening to the Peddler's tale, they go to the palace courtyard.
In front of the palace, Jafar has chained Jasmine up against the door. When Sora and friends confront him, he tries to hit Iago, but when he cowers behind Goofy, Jafar aims at Aladdin instead. Iago flies in front of him to shield him from the attack, causing him to collapse to the ground. Jafar transforms into his genie form and engages in a fierce battle with Sora, who fights on Carpet. During the fight, Jafar hurls debris from all over Agrabah, badly decimating the city.
Sora finally destroys Jafar for good. After the battle, Genie expresses his disappointment for not being able to help. They ask him to restore Agrabah to normal, which Genie does, but with reluctance, as he wanted to improve it with his magic. Iago apologizes for helping Jafar again, and they forgive him after having seen his sacrifice. Aladdin assures Sora that he'll find Riku one day, filling him with hope. With that, they move on...
- Arc Villain: Jafar
- Apocalypse How: Aladdin assumes Jafar would cause a Class 6 if he's not stopped quickly enough. Jafar is actually gunning for a Class X-4.
- Bittersweet Ending: Jafar is defeated and vanquished for good, saving the universe from his nihilist insanity, but Agrabah sustains heavy damage, and an untold amount of people were likely killed. Genie does restore Agrabah to the way it was before Jafar was released, but it's unlikely anyone was revived.
- Dirty Coward: Iago ends up betraying the trust of Sora's party and Aladdin when Jafar forces to lure them away from Agrabah, with Sora and Donald calling him out on it. That said, he redeems himself after taking an attack from Jafar meant for Aladdin.
- Evil vs. Evil: According to the Peddler, Organization XIII had their own plans with Jafar. They likely aborted it, as any Heartless coming from Jafar would be uncontrollable and probably derail their and Master Xehanort's plans.
- Lured into a Trap: Jafar forces Iago to divert Aladdin and Sora's party away from Agrabah so they won't interfere with his genocidal attack on Agrabah. Iago ends up confessing, and they return before any damage is done (asides Jasmine being captured).
- Omnicidal Maniac: Jafar doesn't seek just genocide against Agrabah. He wishes to destroy the universe.
- Rags to Riches: The chapter opens up with SDG learning that the Peddler made a huge fortune after he acquired the "Treasure suitable for a Sultan" in Act One. The riches came from Organization XIII in exchange for remaining quiet about their (seemingly aborted) plans to turn Jafar into a Heartless.
- Schmuck Bait: Jafar tricks the Peddler into freeing him by stating he's the true Sultan of Agrabah trapped by demons, and will reward the Peddler if freed. He falls for it, but is unrewarded (the riches came from a member of Organization XIII, likely Luxord).
- Whole-Plot Reference: This visit is much more strongly based on the events of Aladdin: The Return of Jafar.
- With Great Power Comes Great Insanity: Originally, Jafar was a Multiversal Conqueror who sought unlimited power. Here, due to being consumed by hatred, he's a full-blown nihilist who actively seeks to destroy the universe.
