The third game in the Castle of Shikigami series of bullet hell games which saw release in Japanese arcades during 2005 and got ported to computers during 2006, then finally the Wii and Xbox 360 in 2007 with the former version seeing release in the U.S.A. during May in 2008. Castle of Shikigami III continues the gameplaystyle of the previous games in the trilogy with two-part levels that come in a batch of five with each duo of selected characters having different combinations of dialog that leads to around 50 varations of the story. The player characters have one basic attack for each with it amounting to firing upwards via the assigned button and shikigami functioning as the player's second attack by keeping the button fire pressed down or having a different button pressed in the versions released for consoles. The Shikigami of each player character is different with the game providing two versions during the beginning with the available amount of bombs for the cast being limited and working differently depending on who is selected.

When enemies get taken out, they drop coins that immediately enter the player's inventory, just as long as the enemies do not get destroyed with a bomb. Coins individually increase in point value by 10 until the maximum of value 10,000. The game brings back the Tension Bonus System, thus enabling the player to attack with stronger weapons with players being able to trigger the system automatically with bomb used up with the time active being a small amount with regular projectiles firing faster with more damage dealt to enemies. Once a stage ends, the combined coin value accumulated over the course of it counts towards the total score of the game's run.

Should the player get shot or crash into an obstacle, it would subtract part of the player's heath bar which would lead to a game over if it's completely depleted. But there are two ways of gaining more bombs such as getting hit or scoring enough points with the bomb cap being no higher than five along with a life cap of no more than 3. The player must defeat each boss in a finite amount of time or thay will get pursued by a ghost they cannot damage. If the player evades the ghost long enough, the boss will face defeat automatically. The game has a handful of mode with an easy mode that launches bombs for players who get hit, but cannot be restocked and the game being over after clearing the second part of the third stage.

The S3MIX mode replaces the game's music with an arrangement of a BGM from Castle of Shikigami 2. The Extreme Mode speeds up the firing rate of the player's enemies with them having to dodge more projectiles after the enemies get destroyed with the home persons adding two more of these modes which alter the speed of projectiles fired as counter attacks. The practice mode allows a completed stage to be completed and tried again. The game gets the settings modified in the Director's mode. The console modes add a mode for Dramatic Change and more for Boss Attacks. The player can also look at artwork, play music, and rewatch scenes depending on how much of the story is seen.

The third game consists of:

• Battle Butler: Munchausen serves as Fumiko's butler, and in III, he proves just as capable in combat as his master.
• Beehive Barrier: Most of the bosses in the third game is shrouded in one.
• Bittersweet Ending: Kohtaro's scenario in Castle of Shikigami III ends with him breaking down in tears over the apparent death of Tsukiko while Sayo comforts him.
• Cerebus Rollercoaster: There are times that the game doesn’t take itself seriously, while in other scenarios, it does.
• Characterization Marches On: Reika, in that she actually has character in her appearance in the third game; in Time Gal, she was just a blank slate. In Castle of Shikigami III, however, she is portrayed as ditzy and somewhat forgetful, yet still competent.
• Cute Ghost Girl: Sayo becomes one in the third game, having merged with Kohtaro's guardian spirit.
• Darker and Edgier: Compared to the first two games. While it has some comedic and No Fourth Wall moments, several of the main and team endings border on either bittersweet or downer endings.
• Eldritch Abomination: What "Tsukiko" (actually an illusion) turns out to be in CoS III.
• Epic Flail: Yukari uses one in the third game when she reaches her second lifebar. One made up of flowers that sprays bullets.
• Flanderization: In-Universe. Kohtaro's story mode in Shikigami No Shiro III involves the uneasy grounds of Kohtaro's and Sayo's partnership, with the underlying tension of undisclosed feelings; Sayo being a Tsundere (while also feeling guilty about this) with Kohtaro constantly apologizing. Come Dramatic Change Mode, many stories where Kohtaro is one of the two selected characters involve this dynamic in a rather one-dimensional way that varies from scenario to scenario (i.e., Sayo is turned into a Clingy Jealous Girl in some, in others, Kohtaro is almost completely Oblivious to Love, etc.).
• Lonely Piano Piece: Castle of Shikigami III's ending.
• No Fourth Wall: The third game, in which everyone seems to know that they're in a video game.
  Roger Sasuke: Hey! This title is ported to a game console in the home!
• Power Nullifier: Shikou (second boss, third game) shoots arrows that temporarily seal normal fire^note although Shikigami attacks can still be used during his second attack phase.
• Punctuated! For! Emphasis!: From the third game:
  Yukari: "Yukari Horiguchi! Yu-ka-ri!"
• Rank Inflation: In the third game, you're graded by your performance, with F- being the lowest and SS being the highest. At the end of the game (or where you decide to give up), you're given a rank on your overall performance and a title to go with it.
• Shout-Out: In the third game, Nagino's backpack has Bub from Bubble Bobble.

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