Lantern Crystal are quest items that can be dropped from loot chests by defeating Lantern Monsters in the Heartlands, Evershade Forest or the Gem Mines. The Lantern Crystal is required as part of the Dashing Through the Snow quest (which is only available during the Winter season).
As an Ingredient
These items use Lantern Crystal in their recipe:
Crafting
Lantern Crystal is not craftable.