Skeletron

Skeletron is the boss that guards a world's dungeon. If one enters the dungeon before killing him the head of the boss will come spinning and growling into the screen, impacting with the player and causing 9999 damage, effectively one-hit killing the intruder. To summon this boss, you must talk to the Old Man at the entrance to the dungeon at night. The man will transform into the Skeletron. If you attempt this at day, he will simply say "Come back at night if you wish to enter" or "I cannot let you enter until you free me of my curse".

Skeletron is a floating, massive skeleton head, with floating arms. What appears to be blood spurting from his arms and neck are most likely "the magic forces holding it together", as noted by Blue in a let's play video.

Skeletron will try to swing his arms at you and has a special attack where he spins his head around and follows a player that should be avoided. His head, at 5000 health points and 12 defense, is the most resilient entity in the game, so it is not a good idea for lower-end players to attempt to defeat him. Destroying the head also destroys any remaining arms that Skeletron has. He must also be defeated before the break of dawn; all players will instantly die if he is still alive at that point.

Once you defeat Skeletron, you may enter the dungeon as many times as you like. You may not battle him again on that map and must create a new one if you wish to fight him.

Currently, if you attempt to enter the dungeon at night without defeating Skeletron, the floating heads that attack you will do only 35 damage like the regular boss. Meaning you could theoretically run into the dungeon and loot a few chests at night if you had potions. If you manage to defeat one (or more) of the Skeletron heads, it will count as defeating the boss, unlocking the dungeon normally.

The old man who stands in front of the dungeon can be killed if you manage to deplete his health, however, if you enter the dungeon Skeletron will instantly spawn and kill you.

If you teleport to your home, Skeletron won't follow you. Also note that if a player fails to defeat Skeletron, Skeletron will instantly die without a "Skeletron has been defeated!" message.

If you build a small house and put a bed inside near skeletron, it is possible to set your spawn point near the boss, making the respawns act as 'extra lives' against him.

As of Update 1.0.4 when you kill Skeletron a Clothier can move into a vacant house.

Drops

 * 5-15 Lesser Healing Potions: 100% (1:1 chance)

Soloing Skeletron
Defeating Skeletron on your own typically requires at least Shadow Armor and a good ranged weapon. The Ball 'O Hurt hits multiple times and has some range, while the Demon Bow has great range and does more damage per hit. The Demon Bow is better for players with low health and armor who need to dodge often, while the Ball 'O Hurt will make for a faster fight if the player uses it well and doesn't die.

The Minishark is quite useful against the boss as it is fast and powerful due to its damage per second, but requires approximately 1000 bullets for a full fight and costs 40 gold coins. The Thorn Chakrum can also be used due to the combination of range and speed; the higher damage is also very important against Skeletron's armor. Starfury can hit multiple times, but does relatively low damage due to Skeletron's armor and is not very effective due to the mana cost.

Players who can mine in the underworld can use the Molten Fury and Molten Armor, which makes for a far easier fight than any of the previously mentioned weapons. A Sunfury acquired from killing bone serpents is very effective, while a Flamarang is still relatively effective. A crafty player could also enter the Dungeon behind Skeletron at night to obtain a Handgun from a Chest to create a Phoenix Blaster, which will kill Skeletron relatively quickly; this method is very risky and is not recommended for first-time players however.

The fastest way to kill Skeletron is to use the Star Cannon with around 100 stars, but this method requires an upgraded Minishark and takes a lot of time to obtain Fallen Stars in bulk.

Fighting is best on a flattened roof so you have space to dodge Skeletron's attacks more effectively and avoid or maneuver around any other monsters that may spawn during the fight. Multiple levels of Wood Platforms are recommended, because they allow you to quickly drop down to avoid some attacks. For a quick kill, target his head only; for a safer kill, kill both arms first. Once he has no arms, he can only harm the player by spinning his head at them, which is very dangerous but is easy to dodge with movement speed or by using a Grappling Hook. Remember to heal frequently when fighting him, as his attacks with his arms can be hard to dodge and are very damaging.

An alternative strategy for lower tier weapons is to use either the War Axe of the Night or The Breaker with Shadow Armor. Both weapons are easier to get early on, especially the War Axe of the Night, since it only requires Demonite Bars. Both weapons allow for holding down the mouse button for a constant swing and a fair amount of damage when combined with Shadow Armor's attack speed increase, but this method is very dangerous due to the melee combat and requires lots of healing potions and health.

Skeletron's "Final Attack"
Skeletron is the only Boss with what can be called a Final Attack. When the game turns to daylight, Skeletron will charge at the player, inevitably doing 9999 damage to the player nearby, unlike the other 2 bosses, for the Eye of Cthulhu, who just flies away, and the Eater of Worlds, that just doesn't stop fighting until defeated.