It is not located within a dungeon, but can be found in the open, explorable world of the Oasis. Spawn points may vary, but it can spawn in the Southeast portion of the map from the waypoint. The blade has much higher chances to drop in Campaign Mode than in Adventure Mode, and is a not a guaranteed drop (much better odds are on Normal difficulty) from the Shrine of Rakanishu. As of patch 2.4, the blade drops from the shrine, not from Avatar of Rakanishu that spawns at the climax of that event. Attacking Bashiok with this blade equipped will reward the player with the Bashanishu achievement.