This location is found while looking in the southwestern area of the Mushroom Kingdom. This island is also the home of the Yoshi in this installment.
Mario and his team decide to take a brief rest break at Yo'ster Isle where they meet up with a green Yoshi. The green Yoshi explains to Mario that a tough Yoshi named Boshi is taking everyone's cookies and not allowing them to race. Mario decides to help out Yoshi and they win the race against Boshi. Boshi learns the error of his ways and allows all Yoshis to race again. Mario and his team set out on their quest.
3 Musty Fears Side-quest
After Mario agrees to do the flag quest for the 3 Musty Fears, he can come here to find a flag between the "G" and the "O".