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The Lake of Blood is a lake in the mountains behind the Hakurei Shrine that appears to be filled with pure blood, rather than water. It appears in the second stage of Lotus Land Story. The entrance to Mugenkan lies within this area.
The stage appears to be a completely red lake with rocks scattered about. Once Kurumi appears as a midboss. the background turns black with more rocks this time wrapped in shimenawa ropes. The manual of Lotus Land Story states that stage 3 takes place in the lake after the "blood" is drained out.
Reimu Hakurei and Marisa Kirisame must pass through here to go on to Mugenkan, however, the gatekeeper Kurumi interferes stating she's defeated every intruder who has tried to pass before. That is until Reimu and Marisa defeat her with ease.