Temple Catastrophe is an event that takes place during the Galuna Island arc.
Gray wakes up in the village and finds out that the village has been destroyed by Lyon's comrades. The villagers were safe thanks to Natsu and Lucy and, upon asking for their location, he is directed into a tent where he immediately meets an angry Erza and a tied-up Lucy and Happy. Erza immediately asks Gray why he didn't bring back Natsu and Lucy like he was supposed to. Gray asks where Natsu is, to which Erza replies that she wants to know as well. Lucy explains they couldn't find him despite searching. Erza states they'll find him and leave but Gray protests, saying they should help the villagers since they have a problem. However, Erza shows no interest in doing so.
In the forest, Natsu walks to the temple, lamenting having fallen asleep despite his plan. Approaching the entrance, Natsu gets ready to go forward.
Meanwhile, Erza states she's only around to bring the rule breakers back to the guild, despite Gray telling her they need to help the villages. As she claims other guilds will handle it, Gray says he is disappointed in her, at which point she draws her sword. Gray grabs the sword and points it to his Guild mark saying he will not go back and she can do as she wishes for this is his choice. Gray subsequently leaves the tent, determined to pursue his mission. An angry Erza quickly cuts the ropes off Lucy and Happy, telling them that they're going to take care of the job, though they'll still be punished.
Inside the temple, Toby talks to Lyon, saying that Fairy Tail managed to defeat his comrades. Zalty appears and says by night, Deliora will be revived but if someone interrupts the Moon Drip, Deliora will be trapped in ice forever. Zalty also points out that their opponents are strong, but a confident Lyon says that they won't be able to defeat him. Zalty says he will as well join the fight and use his Lost Magic, shocking Toby while Lyon calls him creepy. Suddenly, the temple starts to tremble. Everyone inside the temple is surprised and does not know what exactly is happening. Zalty says someone has titled the temple and finds out that it's Natsu. The Fairy Tail Mage tells them that as the temple is titled, moonlight won't reach Deliora, thus preventing the Moon Drip.
As Lyon seethes at the Fairy Tail Mage, Zalty tells Natsu that he is smart, despite his appearance. Natsu then charges at Lyon who uses an ice clone as a decoy and follows by attacking Natsu. The two start a promising battle and Zalty interferes in the battle; crumbling the floor under Natsu to divert his Fire Dragon's Roar. Lyon sees through Zalty Magic and tells him not to interfere. Zalty tells Lyon he does not want him to die, to which an angry Lyon says flames like them won't hurt him and tells Zalty to leave them alone. He states that he is the only one who can defeat Deliora and is doing so to surpass his teacher Ur. Natsu returns and asks him why he can't just battle Ur, to which Lyon replies that she is already dead because of Gray. An angry Natsu says he will punish Lyon for the many people suffering because of his plan.
Outside, Gray explains to the others that Lyon wants to defeat Deliora because Ur could not and as a result, by defeating the beast Lyon would have surpassed Ur. Lucy understands that it is the only way to know whether Lyon surpassed Ur. However, Gray reveals that Ur is not dead, she still lives, shocking his comrades. With this, Gray starts explain the history of how Deliora attacked his hometown and how he was then found by Ur and Lyon.
Ur taught Gray to use Ice-Make Magic which the latter wanted to learn, to defeat Deliora. Eventually, Gray asked Ur to teach him more powerful Magic. However, Ur told him that he was already learning a powerful Magic. Later Gray heard some of the bystanders talking about Deliora being nearby. Hearing that, Gray left to quench his thirst for revenge despite Ur's warnings.
While on the move, Gray and the others are surprised to see that the temple has been titled. Assuming its Natsu's work, they realize that the moonlight will not reach Deliora. The group is suddenly attacked by robed people, at which point Erza tells Gray to go settle things with Lyon while she and Lucy take care of the attackers.
Gray remembers the battle between Deliora and his mentor, who told Gray that it was her duty to seal his darkness. As an unconscious Lyon woke up and prepared to use Iced Shell to beat Deliora since Ur couldn't, she froze Lyon before he could execute the spell. Ur told Gray the spell would make her body become ice for eternity and asks Gray to tell Lyon that she was dead. When Lyon woke up demanding Ur's situation, Gray said she died, enraging Lyon and causing him to blame Gray for it.
Back inside the temple, Gray reaches Lyon telling Natsu to let him take care of this. Natsu tells him that he already lost to Lyon but the latter is confident this time. Gray says he is responsible for Ur death, and adopts the Ice Shell stance, saying this is his punishment, which shocks Lyon.
Gray demands Lyon leave this island with his comrades. However, Lyon is not afraid even as a serious Gray further charges his spell. Lyon is unable to stop him and Gray says he is responsible for Ur. Gray asks Lyon one last time if he will leave, to which the latter replies by telling Gray to do it. However, Natsu punches Gray, calling him a fool. Natsu says it's his fight and the two start arguing again. In the process, Gray says it is between him and Lyon and he will even die for it. Natsu grabs Gray's arm, asking Gray if this is how he is going to end this. Suddenly, the temple starts to move again.
Outside, Lucy is bewildered to see that the temple is back to normal - standing straight. Inside, Gray says that now the moonlight will reach Deliora and then, Zalty appears. The latter says the sun will set soon, with Natsu questioning him on how he turned the temple back to normal. Zalty ignores Natsu, making his way to prepare the Moon Drip ritual. An enraged Natsu starts chasing Zalty and tells Gray to take care of Lyon and not to disgrace Fairy Tail's name.
Gray asks Lyon if he anticipated Natsu's interference, which Lyon says he did not. Gray tells Lyon to stop, for which Lyon mocks him and Fairy Tail. Gray tells Lyon Ur is still alive as ice and, the latter approaches Gray and drives a sword in his belly, saying he already knew this fact. He says it is not Ur but a scrap of ice before removing the sword as Gray curses him.
Natsu chases Zalty when suddenly, Zalty motions his hands and the ceiling crumbles. Natsu however, destroys the rocks and Natsu is surprised to see that the ceiling regenerates itself. Zalty explains that this is the way he actually repaired the temple earlier, also revealing that this is a Lost Magic. Suddenly, Zalty disappears, leaving Natsu dumbfounded.
Meanwhile, the arduous battle between Lyon and Gray goes on. Gray is determined to stop Lyon and trusts Natsu to be the one to stop the revival.
Natsu finally catches up with Zalty who is near the frozen beast. Salamander tells Zalty that he found him thanks to his advanced olfactory sense. He resolves to defeat Zalty. Suddenly, the light reaches Deliora leaving Natsu shocked. Above, Toby is carrying out the ritual. The ice starts to melt and, the Fire Dragon Slayer decides to stop Toby but is stopped by Zalty, who will not let the ritual being interrupted. Zalty laughs at Natsu's decision to use flames near the ice, calling it unwise. However, Natsu sees through his lie.
Meanwhile, Gray is surprised to learn that the Moon Drip has started again. Lyon tells Gray he brought Deliora here three years ago. Gray teases Lyon for losing three years with Lyon saying Gray wasted ten years in a ridiculous Guild. Gray says he only followed Ur's words; visiting western countries to find powerful Mages, who he found at Fairy Tail. Lyon, determined to defeat Deliora and surpass Ur, charges at a disgusted Gray who says Lyon is too blind to surpass Ur. The two continue to battle. At a point Lyon is unable to break Gray's Ice-Make: Prison to which Gray says due to him using one-handed to mold his Magic, his ice moldings are unbalanced. Finally, Gray defeats Lyon with his Ice-Make: Ice Cannon.
As Gray covers his wound, a loud noise is heard by everyone nearby. The Moon Drip has completely melted the ice, unleashing the fearful creature, Deliora. With seemingly no options, Gray resolves to take care of it with Iced Shell.