Nestled in the foothills of the snow-capped Sword Mountains is the mining town of Phandalin, which consists of forty or fifty simple log houses, and ten to twenty nicer brick houses near the center of the town. Crumbling stone ruins of ancient cities surround the newer houses and shops.

Phandlin’s residents are quiet, hard-working folk who came from distant cities to eke out a life amid the harsh wilderness. They are farmers, stonecutters, blacksmiths, traders, prospectors, and children. Visitors are welcome here, particularly if they have coin to spend or news to share. The Stonehill Inn at the center of town offers modest dodging and meals. A couple of doors down from the inn, posted outside the Townmaster's Hall, is a job board waiting for adventurers.

The town has a half wall on the east and south sides that would be strong enough to keep wolves, orcs, and more coming from the mountains. There is a small garrison led by Badhron, squire of Thok Hodros, the First Knight of Phandalin, and Hand to Marldurn, the recently deceased Townmaster.