Galuna Island, the Final Battle!

is the 16th episode of the Fairy Tail anime. It first aired on February 1, 2010.

Gray Fullbuster goes engages in an all-out battle with his former fellow pupil, Lyon Vastia, after realizing that Iced Shell will not work on him. He battles valiantly and triumphs, but is confronted with the fact that the works of Lyon's allies have freed Deliora itself. Gray sets out to confront the demon with only Iced Shell in mind.

Synopsis
Gray Fullbuster is about to cast Iced Shell, a powerful spell that will turn his body into ice forever, but Natsu Dragneel punches him out of it. They bicker as always, but this is cut short as the temple begins to shake.

Outside, Lucy Heartfilia, Erza Scarlet and Happy are fighting against the priests. They too witness the re-tilting of the ruins to its original form, which is shown to be Zalty’s doing. Natsu, annoyed, chases after him and leaves Gray to fight Lyon Vastia. Gray then asks Lyon what he would do, if the Iced Shell hit, to which Lyon replies that he would take it, since he has comrades with the same goal as him. Gray then tries to persuade Lyon to leave Deliora be and tells him the truth about Ur. Unfortunately, Lyon already knows this and unleashes a blitz attack on Gray. He puts down everything Gray says, which makes Gray furious. He punches Lyon into the wall, and states that he is done trying to save him. They decide to fight barehanded, without Magic, but since Gray is injured, Lyon gains the upper hand.

Meanwhile, Natsu is chasing Zalty. He demonstrates his Magic for him, which is how he untilted the ruins. Natsu asks for an explanation, which Zalty gives. He uses Arc of Time, a Lost Magic so old and powerful that it was left out of history. Another kind of this Magic is Dragon Slayer Magic, the very one Natsu uses. After saying that, he vanishes.

Meanwhile, Gray and Lyon keep fighting. Gray is obviously losing, and this reminds him of a time when he and Natsu were little. Gray is beating Natsu, but because of his determination, Natsu gets up and confronted Gray once more. This makes him get up and determinedly punch Lyon into the wall. He retaliates, but Gray, going back and forth into his memories, achieves to beat down Lyon.

Outside, Lucy, Erza and Happy realize that the priests aren't Mages like them and can be defeated easily. Erza wants Lucy to finish them, so she summons Cancer, who after courting Erza, goes and defeats every priest in the battlefield.

In the meantime, Lyon gets up, and humiliated, uses Magic to attack Gray, who deems this unfair since they agreed to fight barehanded. Lyon states that he doesn’t care, because Deliora will be soon revived. Gray then confesses Natsu’s strength, one they should be afraid of. Natsu finally finds Zalty. He does this using his nose, which Zalty compliments. While Toby is doing the Moon Drip ceremony, Natsu runs to stop him, but Zalty denies him that. Outside, the priests remove their masks and Erza realizes that they are the survivors of Deliora's attack from Brago.

The ruins shake. This means the ceremony is nearing its end, and Lyon tells Gray of everything they did in order to achieve this. Gray thinks it’s pointless, and when Lyon chastises him for playing in some guild, he simply counters by saying he followed Ur’s advice of finding more powerful Mages in the west. He recalls his first day at Fairy Tail, when the Master told him that Ur’s condition was eternal. He then proclaims his disgust at Lyon’s actions, who can only see his ambitions. He attacks, but Gray disarms him, and blocks his Ice Make: Snow Tiger using his Ice Make: Prison. The tiger cannot release itself from Gray's cage, which Gray explains that it’s because Lyon's creatures are out of balance, having been created with one hand. He then uses his Ice-Make: Ice Cannon to finish Lyon off. As he does, a cacophonic noise fills the air. Deliora is free, and Gray’s only choice of defeating it is through Iced Shell.

Fights and Events

 * Gray Fullbuster vs. Lyon Vastia: Rematch (started and concluded)
 * Erza Scarlet, Lucy Heartfilia & Happy vs. Deliora Survivors (started and concluded)
 * Temple Catastrophe (concluded)
 * Natsu Dragneel vs. Zalty (Ultear Milkovich) (started)
 * The Demon's Awakening: Deliora's Release (started)

Magic used

 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer
 * Summoned the Giant Crab, Cancer

Spells used

 * Ice-Make: Panther
 * Ice-Make: Wolf
 * Ice-Make: Sword
 * Ice-Make: Ice Dummy
 * Ice-Make: Wolf
 * Ice-Make: Sword
 * Ice-Make: Ice Dummy
 * Ice-Make: Sword
 * Ice-Make: Ice Dummy

Abilities used

 * Hand to Hand Combat
 * Swordsmanship

Weapons used

 * Celestial Scissors
 * Various weapons
 * Whip
 * Food

Items used

 * Gate of the Giant Crab Key

Manga & Anime Difference

 * The anime added a short fighting scene between Erza, Lucy, and Happy against Lyon's followers.
 * In the anime, a few flashback scenes of Gray's past was shown again during Gray's conversation with Lyon.
 * In the manga, Lyon used a different magic to stab Gray than the anime.
 * In the anime, there was a flashback about Natsu and Gray fighting.
 * In the manga, Lucy didn't summon Cancer.