In Phantom Blade Zero, the road to Pangzhen is not an easy journey. You'll face countless bosses throughout the Village Of Lu, make your way to the Puppet Training Ground, and defeat Yuzan. After this, there will be just one more step left until you can unlock the door - beating Mu Xiaokui.
Mu Xiaokui is a mandatory story boss, but don't let the gorgeous scenery fool you into a false sense of calm: this is a three-stage boss fight where you'll even be taking on two bosses at once in the end, so being prepared is key.
Here's a complete guide covering the best loadout and how to beat Mu Xioakui, the Jade Dancer, and the Iron Fiend in Phantom Blade Zero
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How to Find Mu Xiaokui

Finding Mu Xiaokui is relatively straightforward, for the most part. You need to progress through the Village of Lu area and unlock the Smuggler's Tunnel, which leads to the Puppet Training Ground. Here you will face Yuzan.

After the fight, inspect the red door, and a nearby elevator will drop. Take the elevator to the surface above, and Mu Xiaokui will be waiting for you. There's also a bell here just ahead of the fight, so take a second to save and upgrade your weapons if you haven't done so in a while.
Walk over to the arena area, and after a short confrontation (which also reveals that Mu Xiaokui has the missing Puppet Eye key you're looking for to open the door to Pangzhen), the fight will begin immediately.
How to Beat Mu Xiaokui, Young Mistress of the Order

Mu Xiokui is the final boss before you reach Pangzhen, and she puts up a good fight. We've covered each individual phase, as they can play quite differently.
In terms of what loadout to consider for this fight, I'd recommend something to help chip in towards solid stagger or inflicting bleeds. The Outlaw's Warblade remains a top choice throughout many fights as it not only helps with stagger but also enables you to heal yourself on hits, helping with survivability.
This is particularly useful for this fight, especially in phase 3 where you're facing two enemies. Aside from that, you can opt for whatever build works for your preferred playstyle. The only other items I considered to be a must was Hunter's Chain Sickle, as it has range and enables you to hit both phase 2 bosses at once, clutching that stagger to let you go on the offensive.
Phase One

The first phase of the fight shouldn't be too much of a problem. She uses slicing sword projectiles and has the ability to vanish and reappear, but she is also relatively easy to block and parry in this first phase.
Be patient, wait out the attacks, and then play very aggressively once you break through the stagger meter, as you can tear through her health quite quickly and chain combos without interruption. Perfect Dodge in particular creates huge openings to get the break, so look for these timings above chaining offensive attacks.

She also uses a sweeping blade combo, so if it's not her ranged projectiles, then expect her to move around and chain multiple hits.
Phase Two

During the second phase, she ups the stakes a bit and becomes a bit more aggressive in her close-range combos.
Keep an eye out for flashes of purple during her attacks, as these are summons that can unleash powerful moves on you. This is where you need to be a bit more spatially aware, always ready to adjust your movement and react on the fly.
When she does use these attacks, don't bother trying to counterattack. Just dodge, wait out the animation, and then re-engage once the coast is clear; otherwise, you can get caught between two targets - your health is valuable in this fight, and you'll already have plenty of that in the next stage.
Phase Three

Phase 3 is actually a secret third phase to this boss fight, tied to completing the Young Mistress questline and collecting all of the ribbons.
Tip: If you want to make sure you unlock this secret boss phase, be sure to follow our complete ribbon locations guide linked above. This will walk you through the process of picking them up along your story progression leading up to this point.
In this fight, Mu Xiaokui will step back from combat herself and instead send out her guardians - Iron Fiend and Jade Dancer. They're a brutal combo that will play incredibly aggro, lining up their own attacks and bouncing combos off of one another to try and take you down.

The most important part of this fight is keeping an eye on your positioning and adapting on the fly. You're likely going to be making split-second decisions to block and parry damage from both sides.
Focus them one at a time for staggers, as you can actually create distance from one and land a nice chunk of attacks while the other is staggered. You'll just need to be aware of hits from behind while you go full aggro on whichever one breaks first.

Be patient, take one boss down, and then pick off the other. Finally, after an end sequence where you have to hit and mash buttons at the right time, the fight will conclude, and Mu Xiaokui will speak to you one last time.

Mu Xiaokui Fight Rewards

In your closing conversation, Mu Xiaokui will finally give you Puppet No. 45's Eye, which is the piece needed to open the path to Pangzhen.

Aside from that, you'll also get Fist Fragment: Core and the Fiend Saws - a dual-wielded weapon with increased damage and guard-break capabilities. These swords are ridiculously good for a fast weapon moving forward, so I'd recommend giving them a try.