A small island north of Worfin Island. Sheep island is named after the large flock of sheep kept there by a dwarf shepherd named Garon who was the owner, ruler and sole inhabitant of the island until the Ogre Wars. Garon allowed his island to be annexed by the Realm of Azmar during the Ogre Wars and dwarves from Azmar settled there briefly before they and Garon were driven out by ogres.

Garon was given the title of Lord of Sheep Island by the Warlord Karleg of Azmar. After Azmar was captured by ogres and Prince Yarl of Azmar refused to send the Azmar Army to fight them, Lord Garon formed Lord Garon's Army, defeated the ogres at the Battle of Sheep Island and declared independence from the Realm of Azmar.

Sheep Island was known as Tower Island before Garon arrived. This is because the ruins of an ancient watchtower are there. No one knows who built the tower or how old it is. It is believed to be a relic of the Elder Days.

Named places on Sheep Island include Allort's Mountain, Tower Hill and Sheep Hill.