Morpheel

Twilit Aquatic, Morpheel (覚醒多触類 オクタイール) was the third boss, and a giant monster Link faced at the bottom of the Lakebed Temple. It was a massive eel with eight watery tentacles surrounding its large mouth, and a single eyeball in its back.

Battle
Upon entering Morpheel's water-filled chamber, Link must put on his Zora Armor and Iron Boots to sink to the chamber bottom, where only the eel's mouth and tentacles were seen sticking out of the sand with a single eyeball constantly changing position within its tentacles. This gave it a somewhat sea-anemone-like appearance. Link used his Clawshot to rip the eyeball out of the gelatinous appendages and strike it, while Morpheel tried to grab Link with its tentacles and eat him, though it would spit him out after a chewing on him a few times. It is possible to prevent this by slashing Morpheel's tentacles when they come too close. It would also expel a school of bomb-fish from its jaws---thus giving Link a slew of decoy targets for his Clawshot.

After repeating the same form of attack a few more times, Morpheel erupted from the sandy chamber bottom, revealing its eel-like body, and began swimming around the room, again chewing on Link if he happened to come within sufficient reach of its jaws. This is the only way it can damage Link. Link then used the Clawshot to grapple onto its eye, now on the top of its "head", and stabbed it repeatedly. After a number of blows its eyeball was destroyed, and with no eyesight, Morpheel smashed into the chamber's wall, drained the room of water, and died. Its body subsequently exploded and released the third Fused Shadow.

Video
This clip was provided by lleeoo2010 at youtube. w0HPI6cBj3U&feature=related

Trivia

 * According to the official The Legend of Zelda: Twilight Princess website, Morpheel was turned savage by the power of the Fused Shadow, suggesting it to be a more peaceful creature under other circumstances.
 * Morpheel is a reference to Morpha, the boss of the Water Temple from The Legend of Zelda: Ocarina of Time; apart from their similar names, Morpheel's first phase is very similar to the battle against Morpha, who had a watery body with a nucleus that Link had to pull out with the Longshot.
 * Morpheel's second phase is very similar to the second phase of the battle against Argorok, with the music being the same and the way Link attacks the two bosses, by latching onto their backs and stabbing their weak spots.
 * Morpheel is the only boss in The Legend of Zelda: Twilight Princess who bleeds when hit.

Etymology

 * The first syllable "Morph" is referring to Morpha (see above trivia), and the second syllable "eel" is referring to the animal to which it had many physical similarities.