Goblin-town is the seventh level in the Story Mode. The story mode walkthrough details everything needed to get through the chapter. All Collectibles locations are detailed in the Free Play walkthrough farther down the page. To get into the level, follow the light blue studs up onto the jagged Lego stone structure against the rock wall. Drop down onto a cracked plate and buddy-up to bust through it and get to the entry point for the chapter. After the opening scene follow the path down the little hill. Destroy the little gate on the left side and go through the little access hatch to reach the upper area. Cut down the hanging skeleton, then return to the ground, pick up the skeleton's head, and throw it at the debris up on top of the center stone wall. Use the debris that falls down to build three ledges, then climb up the ledges and over the wall. Switch to the Goblin (Confused) and have him climb the netted wall then jump down to the far side of the gap. Destroy the wood barrier there, then build a plank walkway so Bilbo can get across the gap.
In the next area, destroy a pile of skeletons on the right side, then pick up a skull and throw it at the crate hanging overhead on the left. Use the debris from the crate to build a craft table. Hand over the required loot (backtrack and destroy things if the character comes up short) and do the Lego build to create a catapult. Climb into the catapult bucket then switch characters. Come around to the left side of the catapult and attack the light brown lever to send the other character flying and launch a cut scene. After the cut it's time to solve Golem's three riddles. To "solve" riddle #1, destroy the object in front of Golem's perch, and use the pieces to build a mountain. To solve riddle #2, use the pieces on the ground in the center to build a goblin climb wall, then use the goblin to climb up it. Destroy all the junk in the upper area to drop a crank handle down to the ground. Pick up the crank handle and use it to turn the windmill. To solve riddle #3, pick up the stone on the ground by the windmill remains, and throw it at the small-character access hatch hanging in a net on the left side of the area.
When the pieces drop, finish building the hatch and then go through it to reach the upper area. Destroy the objects up there then build a ladder so the other character can come up. Jump and grab one of the hanging chains, then have the other character grab the other one to bring down the whole structure. Go back down to ground level and use the debris to build a craft table. Turn in the required loot then do the Lego build to create an hourglass, and launch the final cut scene of this area. This section is a battle against a giant Goblin. The first objective is to destroy ten normal sized goblins. The ones around the edges can't be touched, so wait for waves of attacking goblins. Once ten goblins are put down, Gandalf appears. Switch to him and follow the button prompt to blast into a cut scene. Next, wait for the giant goblin to pick up a crate with a target on it, and use Kili to shoot the target, busting the crate and stunning the goblin. While the goblin is stunned, approach and attack him.
Next, switch to Dori and wait for the goblin to pick up another crate, this time with a gold Lego hook on the front. Use Dori to pull crate down and stun the goblin. When the goblin is stunned, buddy-up and attack him. Finally, switch to Gandalf and wait for the goblin to pick up a crate with a blue magic lock on the front. Use Gandalf to destroy the crate and stun the goblin, then buddy-up and attack him to finish the area. From the start of this area, head to the right and use Dwalin to hammer smash the cart blocking the way. Jump up to the bridge just above, cross it, then use Gandalf to blast the blue barrier on the far side of the platform. Blasting the blue barrier drops a battering ram. Have two characters pick up the ram and run it through the ranks of goblins just ahead. Just past the goblins, turn a crank to raise a bridge, then head over it. After being transported up a level, follow the walkway around and down to the color wheel targets. Use Ori to shoot the targets and set the wheels to (L to R) green, red, and blue to raise the platforms.
Hop across the platforms and jump-smash the white cracked plate to send the barrels rolling through the next barrier. A mean old goblin will raise a bridge. Use Dori to pull the gold Lego hook to bring it back down. Follow the path around to find another barrier. Cut the chain on the left side to bring it down, then use two characters to pick up the ladder and place it across the gap. Climb a series of ladders then smash the barrier at the end and walk through to be transported down a level. Head forward a bit then grab a torch and stand in front of the wheel to light a fire and create a swinging platform. Put Kili on the platform and use him to shoot the targets on the other side to lower the platform. On the other side, knock the lid off a basket on the ground and pick up the crank handle inside it. Destroy the stuff on the right side to reveal the crank - put the handle on it and get cranking to raise another bridge. Cross the bridge to be transported to the area above. Follow the path to a dwarf stack plate, and put Bifur, Nori, and [Oin]] on it, then use another character to climb up them to the platform above.
On the upper platform, buddy-up, look for a cracked plate in the floor, and smash through. Switch to other characters and walk them up the ramp to the new craft table. Turn in the required Loot and do the Lego build to create a crank. Use the crank to turn the swinging platform, cross it, and follow the path around to be transported down a level. Down below, use Gandalf to blast the boulder over the heads of the goblin horde, then jump-smash the cracked white plate to send the boulder rolling over them. Head to the right and into a cut scene. The final battle with the Goblin King is largely a waiting and surviving game. Battle the small goblins that come around, and wait for the giant goblin to smash boulders down on his own head, then buddy-up and attack him. Do this three times to end the battle and the chapter. Note: There does not seem to be anything the characters can do to hurry the giant Goblin along, and it can take quite awhile for the goblin king to get around to bringing the boulders down for the first time.