From Diablo Wiki
Whimsyshire is the Diablo III Secret Level, a humorous area that's a direct homage to the Diablo II Secret Cow Level. It requires the Staff of Herding to enter, a special object that can only be assembled from multiple legendary materials and a special crafting recipe.
Patch 2.1 for the PC/Mac and UEE added rare rainbow goblins who appear randomly throughout the game and when dying will sometimes open a portal to "Whimsydale." This area is identical to Whimsyshire, with a different name for technical reasons. This makes the rainbow special land more accessible for players who don't care enough to farm up the required legendary materials, such as Seasonal characters.
The information and images on this page can be considered spoilers, so continue at your own risk. Scroll down to reach the content...
 Secret Level?
This area was a complete secret during Diablo 3's development, though fans were not that surprised to see it when it was first found shortly after launch, since it was clearly evolved from the Diablo 2 secret cow level + the Diablo 3 "too colorful" art controversy.
Reaper of Souls desegregated Whimsyshire via Nephalem Rifts. In those randomly-generated Rifts it is possible to get the cute Whimsyshire monsters in normal game tilesets, and/or normal game monsters in the Whimsyshire tileset.
It is also possible to get the Whimsyshire layout in a Rift, with normal monsters from elsewhere in the game. They tend to look very odd on the cartoonish rainbow level, if it spawns without a palette-shift.
- These rainbow goblins and their portals are similar to the Patch 2.1 addition of Greed's Domain, reached via yellow portals from treasure goblins.
- Rainbow goblins have been sold as a merchandise item, and the in-game versions are exactly modeled on the plushies. (Not just rainbow-colored versions of normal Treasure Goblins.
 Whimsyshire Overview
The secret level is a fully-playable area of the game. There are monsters (cute ones), gold and item drops, health orbs (which look like giant pink cupcakes), random Elites and purple Unique monsters, and even an amazing, baby's-blanket looking minimap.
Though the area is accessed through Act One, prior to the difficulty scaling introduced in D3v2, the difficulty of Whimsyshire was equivalent to late Act Four, and players were initially able to use it for end game farming.
This secret level was a popular farming target early in Diablo 3 vanilla, leading the developers to nerf it in terms of rewards. They wanted Whimsyshire to be a fun place to visit once in a while, but not a major farming goal, as Diablo 2's Secret Cow Level was.
 How to Enter
To gain access to Whimsyshire in the PC/Mac version requires five special ingredients, and a Plan to teach the Blacksmith how to craft them into the Staff of Herding. Once players have created a Staff of Herding they must carry it in their inventory to the Cow King's Ghost, who rises up from a cow skeleton found on the Old Tristram Road, near the pit glowing with a mysterious red light.
After the Cow King's Ghost conversation, the glow from the pit changes to a rainbow color and it becomes a clickable dungeon entrance. As was the case with the Diablo II Secret Cow Level, characters must have defeated that difficulty level to enter the secret level.
In D3v there were four types of Staff of Herding, corresponding to Normal, Nightmare, Hell, and Inferno difficulty levels. That system was simplified in D3v2 and currently there is only one Staff of Herding, with the monsters in Whimsyshire scaling to the player's level, as do all other monsters in the game.
 Rainbow Portals
Patch 2.1 added special ultra-rare Rainbow Goblins, who will sometimes leave a rainbow portal open when they die. Players can use this to enter Whimsydale, even if they have never crafted a Staff of Herding.
 Diablo 3 Console Differences
Whimsyshire works just the same for the Diablo 3 console, but the materials required to gain entrance are different. Leoric's Shinbone and the Liquid Rainbow are not found in the console version and are not required to create the Staff of Herding.
Blizzard has not given an explanation for this simplification.
 Required Ingredients
Players must assemble the five ingredients and the Staff of Herding plan to enter the level.
- Black Mushroom ( )-- Found rarely in a room on Cathedral level one, in early Act One.
- Leoric's Shinbone ( )-- Found rarely in the fireplace in Leoric's Manor, in late Act One.
- (Leoric's Shinbone is *not* present or required in the Diablo 3 console.)
- To farm for this select Quest number 9 "The Imprisoned Angel" in the Change Quest menu when you log in. Take the Waypoint to Leoric's Manor. You will have two rooms to fight from the back of the manor to reach the room with the fireplace in.
- Wirt's Bell ( )-- An Act II vendor (Squirt) sells it for 100,000 gold on her Potions and Dyes tab.
- Liquid Rainbow ( )-- Spawns in the Mysterious Cave in the Mysterious Chest in the Oasis, Act 2. Save Zaven the Alchemist and he will open the entrance to the cave. The chest is located on level one.
- (Liquid Rainbow is *not* present or required in the Diablo 3 console.)
- Gibbering Gemstone ( )-- Random drop from Chiltara in the Caverns of Frost, Level 2, Act 3. It’s in the Fields of Slaughter. If you get Ice Caverns exit out try again. Chiltara is a Superunique with a low spawn chance.
- Plan: Staff of Herding ( )-- To teach the recipe to Haedrig. Drops randomly from Izual, Act 4.
Once the Staff is created, it can be upgraded to the Nightmarish Staff of Herding, Hellish Staff of Herding, or Infernal Staff of Herding via Gorell the Quartermaster, an NPC merchant found in the town section of Bastion's Keep.
 Items found in Whimsyshire
Monsters in the secret level drop just like any other monsters in the game. Prior to the difficulty-scaling added in D3v2 the monsters in Whimsydale were equivalent to Act Four, making them considerably higher level than any enemies in Act One.
There are a number of special features and visuals in Whimsyshire, most of them clickbles:
- Presents - Often empty, seem to have less of a drop rate for items than chests.
- Pot o' Gold - A golden pot that, when clicked, drops gold and possibly other items.
- Smiling Couds - When clicked on, your character does an animation that appears to be a fist bump to the air above your head, and the clouds drop items and bounce with bigger smiles on their faces. They also giggle.
- Pinata - the Whimsyshire version of a Resplendent Chest, this Diablo pinata is found hanging from a tree in one random corner of the map.
 Legendary Materials
For a time in Reaper of Souls, two types of Legendary Material could *only* be found from purples in Whimsyshire. The entire Legendary Material system was removed from the game in Patch 2.0.5 and while these monsters remain in the game, they will no longer drop special Legendary Materials.
- The Eternal Power Capsule was required to craft the Arcane Barb crossbow and could only be dropped by Evil Oliver, a Cuddle Bear.
- The Mystical Source was required to craft items from the Sage's Journey Item Set, and could only be dropped by Creampuff, Midnight Sparkle, or Nightmarity, the three Members of Team Unicorn: Miss Hell, R'Lyeh, Killaire and Maulin Sorely.
There are several special monster types found in Whimsyshire that never appear elsewhere in the game (except randomly and rarely in Rifts). They are appropriately cute and cuddly in appearance, but fight like any other deadly enemy and can be quite dangerous. They also have especially gory and bloody death animations, to contrast humorously with their cute appearance.
- Twinkleroot - Killer flowers on a rampage. Do not underestimate them. They cannot be knocked back and have no special animation on death.
- Cuddle Bear - Pink teddy bears, also out to kill you. They die in a much messier way than a Twinkleroot.
- Chubby Pink/Purple Unicorns - Unicorns, typically pink but also occurring in purple, that charge and attempt to trample you. They are the largest beings in Whimsyshire, and are also the messiest when they die.
All these... horrors can spawn in elite packs. There are a few special unique bosses that can spawn that are similar in function to most other random purple-named monsters in the game.
 Whimsyshire's Music
The music played in the level is a famous piece of classical music for the piano, Ravel's Gaspard de la Nuit - Le Gibet. (Video of that composition here.) This was first revealed in the following video; the backwards playing begins around the 0:38 mark.
Various screenshots showing off portions of Whimsyshire.