You should level up Rydia a little bit before continuing since she is too weak to go anywhere.
Pro tip: Rydia's default weapon is a Rod, which is useless for attacking. However, it can be used to cast Magic Arrow for free, which is pretty nice. This way, you can conserve her MP in the dungeon.
To use a weapon as an item during battles, select "Item -> arrow up until you see the equipped weapon (in this case it's Rod) -> select the weapon -> select a target".
Underground Waterway is in the northeast of the desert.
- Follow the map below to collect all chests.
- On the second bridge, a new character, Tellah, will join your party.
The cave's path is like this: B1 (South Entrance) -> B2 (South) -> B3 -> B2 (North) -> B1 (North Entrance)
Bestiary Checklist:

Chests/Items:
- C-011: Potion - B1 (South), from the entrance after the top bridge, left chest.
- C-012: Maiden's Kiss - B1 (South), from the entrance after the top bridge, right chest.
- C-013: Tent - B1 (South), after the first bridge, bottom-left corner.
- C-014: Iron Armlet - B1 (South), top-right corner chest.
- C-015: X-Potion - B1 (South), behind the waterfall, top-left chest.
- C-016: Dry Ether - B1 (South), behind the waterfall, bottom chest.
- C-017: Phoenix Down - B1 (South), behind the waterfall, right chest.
- C-018: Potion - B2 (South), top-right chest.
- C-019: Ether - B2 (South), chest in the middle platform.
- C-020: Ice Rod - B2 (South), top-left chest.
- C-021: 580 gil - B3, bottom-right chest.
- C-022: Bomb Fragment - B3, bottom-left chest.
- C-023: Potion - B2 (North), 1st chest near the exit.
- C-024: Feathered Cap - B2 (North), 2nd chest via the hidden passage.
- C-025: Ether - B1 (North), west side, 1st chest.
- C-026: Antarctic Wind - B1 (North), west side, 2nd chest.
- C-027: Hourglass - B1 (North), east side, 1st chest.
- C-028: Shadowblade - B1 (North), east side, 2nd chest.
World Map
Put this new equipment on after you exit the cave.
Enter another cave to the north.
Subterranean Lake
Approach the waterfall to enter Subterranean Lake. Then, follow the map and fight a boss at the end.
Before facing the boss, equip the Hades armor set you've collected in this dungeon.
Bestiary Checklist:
Boss: Octomammoth
This boss is weak against Thunder. So, both Rydia and Tellah should cast the Thunder spell and take turns healing if needed. Cecil uses normal attacks.

Chests/Items:
- C-029: Hades Gloves - B2, right chest.
- C-030: Hades Helm - B2, left chest.
- C-031: Hermes Shoes - B1, bottom chest.
- C-032: Hades Armor - B1, right chest.