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From Terraria Wiki
The Ghost costume is one of the vanity costumes introduced in the Halloween update. It can occasionally be found in a Goodie Bag. When a player wearing it is killed, the costume parts float down into the ground and the player's severed remains do not appear. The costume also becomes transparent, possibly meaning the player becomes a ghost, however the costume parts are still seperated.
- The Shroomite armor's stealth bonus can give this costume an excellent ghost-like effect.