- For the novella, see The Secret of the Terror Castle.
Terror Castle, previously called the Terril's Castle, is a supposedly haunted castle that the sleuths proved isn't haunted, by solving it as their first mystery. It is located in a narrow and small canyon, the Black Canyon, above Hollywood. As its owner and creator, Stephen Terril, used to act in horror movies, he built it to look like a haunted castle set used in one of the movies he acted in, and filled it with old armor suits, Egyptian mummy cases, things from haunted locations like buildings, and other such things that he had acquired from the movies he had acted in. Terril also had installed some devices in the house, so that he could give his visitors "thrills". These devices helped him in scaring the people who tried to occupy his house, after he had supposedly died.
After Terril's lisp and different voice was revealed, and his career was ruined, he "shut himself up in his castle and brooded". After Terril supposedly died, a note was found tacked to the library table. It said, "Though the world will ever see me alive again, my spirit will never leave this place," and it had his signature. Even after searching every "nook and cranny" of the castle, the police never found any more trace of Terril. Due to the bank having the castle as a mortgage, and Terril owing the bank a lot of money, the bank sent some labourers to collect some of Terril's possessions. However, the men began to grow more and more nervous, for which they didn't know the reason, and refused to finish the job. They said that they heard and saw some peculiar sounds and things, which they couldn't describe properly. Finally, the bank tried to sell the entire castle, but no person would agree to live in the castle, before even buying it.
Soon, everybody who entered the castle, and tried to prove that it was not haunted, found themselves getting extremely nervous after a while, and were eventually became very afraid. This was all helped by Terril's installation of devices to give his friends some "thrills". Also, in fact, while constructing the house, his workers had discovered a fault in the rocks of the Black Canyon, that ran through the ridge until the end of the Winding Valley Road. He walled the tunnel, but, also installed a hidden door. Then, as Jonathan Rex, he bought the land on the other side of the passage, and built a small house there. So, even after he faked his death, he was able to come in and go out of the castle, from the passage.