After you defeat Magma the Fierce, you emerge into the third overworld area of Chapter 3.

Visit Shecola Castle

Go north and go into the castle. From there, if you try to go north and enter the building, the guard will stop you. If you talk to the man to the south of the entrance, you learn of the fortune teller.

To reach the fortune teller, go east until you can go north, and west to find some stairs. Go down. Talk to the fortune teller, who has lost her crystal ball in the pond in the ghost village.

Go back up the stairs, then go east until you are outside again.

Go north to where there is a passage between some mountains. Keep going north to enter a hidden cave in the mountains. Go down the stairs to get a Big Heart. Then go back up the stairs and go north to exit the cave.

Make your way west, and walk into the house to find the Ghost Village.

Ghost Village

Go west and you will find some graves northwest of the pond. One of the graves is a slightly different color from the others. It is the grave marked with O in the diagram below:

    x x x
 x x x x
x O x
 x x
x x
 x

Walk onto that grave to enter the cave under the Ghost Village.