The soldiers corner Mercedes and she threatens to cut her own throat. As one of them walks towards her, someone begins shooting him and the other soldiers, coming to Mercedes' rescue. The rebels come out of the forest, including Pedro, who embraces Mercedes.
We see Ofelia in her bedroom, where she is visited by the fairy and the faun. The faun offers to give her one more chance, and she embraces him gratefully. "This is your last chance," he says, before telling her to get her baby brother and bring him to the labyrinth. Ofelia tells him that the door is locked, and he hands her a piece of chalk to create her own door.
Vidal washes his face in the mirror, looking at the slice that Mercedes made in his lip, and attempting to stitch it back together. Elsewhere in the room, Ofelia takes the piece of chalk and attempts to steal her baby brother. When Vidal is called off to examine the soldier whom the rebels wounded, Ofelia puts some kind of poison in Vidal's drink. She then picks up her baby brother and hides, just as Vidal is returning to the room.
Vidal takes a drink from his glass as an explosion sounds outside. He looks over at Ofelia holding her baby brother and orders her to leave the baby, but she scurries away just in time. Vidal chases her with a gun, but she escapes. As the mill catches fire, Mercedes returns to find Ofelia, but she is nowhere to be found.
Ofelia has run into the labyrinth, pursued by Vidal. He grows weaker as he chases her into the labyrinth, and a portal opens for only Ofelia to enter. Inside, the Faun asks Ofelia to hand over the baby, and tells her that the portal will only open if they offer a drop of the infant's blood. "It's the final task," he tells her, but she refuses to hand the baby over. "You would give up your sacred rights for this brat you barely know?" he snarls at her, but Ofelia refuses.
Suddenly, Vidal appears nearby and wanders up to Ofelia, taking the boy from her. When she protests, Vidal shoots her in the stomach.
Vidal brings the baby back to the camp and hands it to Mercedes, before pulling out his watch and requesting that the others tell his son when exactly he died. Pedro takes out his gun and shoots Vidal in the face.
Mercedes and Pedro go into the labyrinth, where they find Ofelia dead on the ground, dripping blood. Her blood drips down into the labyrinth, which opens the final portal. She is revived and reinstalled as the Princess Moanna in the underworld. As she approaches the throne of the king, he says, "You have spilled your own blood rather than that of an innocent. That was the final task, and the most important." Her mother, Carmen, sits beside the king and invites Ofelia to sit with them in the court.
The scene shifts back to outside the underworld, where Mercedes mourns the death of Ofelia. A narrator tells us that Ofelia lives out the rest of her days as the Princess Moanna of the underworld.
Just when it seems like there is no hope for the protagonists, their luck begins to shift. Mercedes, after being chased into the forest by Vidal's soldiers, is rescued by the rebels. Meanwhile, the helpless Ofelia is visited by the faun, who is willing to give her another chance. In a moment of hopelessness, both Mercedes and Ofelia find themselves presented with options. Mercedes' choice is of a political nature, while Ofelia's concerns the fantastical realm.
While the faun does come to save Ofelia, he also encourages her to create her own opportunities for escape, and does not provide her with all the answers. The young girl is not simply a damsel in distress, but empowered to participate in her own escape. As the faun hands Ofelia the piece of chalk and urges her to create her own door, we see that his way of helping is in enabling Ofelia to believe in the power of her own imagination, her magical abilities to create the doors through which she might break free from imprisonment at Vidal's.
For being a whimsical fairy tale with a child-aged protagonist, the film is consistently very violent and gory. Images of wonder and enchantment are juxtaposed with some horrifying moments of violence, such as Vidal stitching his slashed lip back together, his shooting of the young Ofelia, and the moment when Pedro shoots Vidal in the face. Guillermo del Toro never shies away from moments of violence, and the brutality of these images of death and pain strike an uncanny contrast with Ofelia's fairy tale world. The film presents a world in which fairy tales and magic do not disappear with age, but they certainly become more gruesome.
In fact, the film leaves the nature of magic and the metaphysical world rather ambiguous at the end. In the real world inhabited by Mercedes and the other adults, Ofelia is shot dead by the evil Vidal. However, the viewer sees that Ofelia's death is actually what delivers her to the underworld and reinstalls her as the Princess Moanna. Thus, the ending of the film presents two different realities, one in which Ofelia dies tragically, and another in which she becomes the princess she has in fact always been. Guillermo del Toro leaves this ending ambiguous, suggesting that perhaps both realities are viable, that death in the human world is nothing more than an awakening in the world of fairies. Thus, it is left up to the viewer to decide what actually has happened.
Pan's Labyrinth bears more in common with traditional myths and fables, with its darkness and investigation of death, than it does with the sanitized fairy tales of the Disney universe. The characters face bloody ends and brutal realities throughout, and magic serves as a balm for the inescapable vagaries of life rather than an exciting supplement to personal frustration. The stakes are higher in Pan's Labyrinth than American viewers are perhaps accustomed to in fairy tales, but these higher stakes make the story's symbolic weight all the more profound.