The striking group of arched terraces perched higher up on the mountain slope to the west of Chashma-i-Shahi is Pari Mahal, The Fairies Abode, a ruined garden palace, the construction of which is ascribed by tradition to the ill-starred prince Dara Shikoh, who was beheaded in 1659 by order of his brother Aurangzeb. Despite its dilapidated condition, it is easy to determine its principal features; for the garden has, probably owing to its difficulty of access, escaped the restoration to which the other Mughal gardens in Kashmir have been subjected. Pari Mahal differs from other Kashmir gardens in that it does not possess any cascades or water chutes, though it seems probable that there were fountains in the tanks. Water was mainly conducted by underground earthen pipes, though a few traces of open water-courses have also been found. The garden consists of six terraces, with a total length of about 400'. The width of the terraces varies from 179' to 205'. In the uppermost terrace are the ruins of two structures, a barahdari facing the lake, and a water reservoir built against the mountainside. The reservoir was fed from above by a spring, which has since gone dry, and of which the only extant remains are the fragmentary stone conduit and the retaining wall against the hill-side. It is a simple chamber, built of rubble stones in lime, with a facade of two small arches. Internally it measures 11' 3" by 5', and has a recess in each of its walls. Water flowed through an arched drain pierced in the front wall which is now partially blocked up. At each corner of the terrace wall is a flight of steps leading to the lower terrace, measuring 22' 3" by 4' 3" . In the middle of the second terrace exactly in front of the barahdari is a large tank with brick sides measuring 39' 6" by 26' 6". The facade of the retaining wall is ornamented with a series of twenty-one arches, including two of the side-stairs. The arches are built in descending order of height from the centre. Each of them is surmounted by a niche, the height of which increases in proportion to decrease in the height of the arch. The central arch is covered with a coat of fine painted plaster, which seems to have always served as a favourite board for scribbling notices in pen and pencil. Various people have recorded on this the date of their visit to the garden. Among them was the cruel Azad Khan, a Pathan Governor.

This terrace seems to have been screened off from the lower court by a parapet wall, which is still extant in parts.

The third terrace is, architecturally, the most interesting portion of the garden. The entrance, which is of the usual Mughal type, arched in front and behind with a central domed chamber, is in the middle of the east wall, and is covered with a coat of fine painted plaster. On either side of it are a series of spacious rooms: the one to its north seems to have been the hammam. Fragments of the water-pipe are still to be seen projecting from a corner of its domed ceiling. Its interior is the most highly decorated of all the rooms in Pari Mahal. On the south side of the entrance are two other chambers, but it is difficult to say to what use they were put. Both of them have pipes inserted into their ceilings, the one nearest the gateway having only one, but the other, two; possibly the latter chamber was used as a kitchen. The western half of the retaining wall has recently fallen; doubtless it also contained chambers similar to those on the other side.

In the central recess of the arcade is visible the originally hidden earthen pipe which conveyed water from the terrace above. From it the water flowed through an open channel and an underground pipe, which ran side by side, and entered the barahdari at the middle of the broad end of the terrace. In all probability the channel formed a tank in the centre of the principal chamber and then emptied itself into the pipe which ran underground, of which traces are still visible on the floor of the barahdari.

It is probable that these three terraces were reserved solely for the prince's private use.

The fourth terrace has nothing remarkable in it except the ruins of the tank - perhaps it was a tank within a barahdari - whose plinth projects far beyond the line of the wall. About the middle of its north wall is the earthen pipe which conducted water to the terrace below.

In the fifth terrace a curious feature of the plinth of the barahdari, or the tank, of the upper terrace is the numerous square holes with which the upper half of its surface is perforated. They were probably intended to harbour flocks of pigeons. The retaining wall is arcaded. The arcade is a double one, the upper row of arches faced a corridor which ran on both sides of the plinth of the barahdari.

The sixth and the last terrace has a rectangular tank in the middle and octagonal bastions at the ends. The lower end is not supported by any retaining wall.