Mr. Krabs' Imaginary Island is a location that appears in the episode "Safe Deposit Krabs." It is seen due to Mr. Krabs being locked in the safe of the Bank of Bikini Bottom Bank for a long time which causes him to hallucinate due to lack of oxygen.
The Imaginary Island first appears as a nice, green island with trees and water. However, after days have passed (hours in the real world), it starts to burn tremendously, ending the island.
Mr. Krabs is first seen on the island where he was relaxing next to Mrs. Greenback. However, things soon turn dire once the Money Dragon appears and eats Mrs. Greenback. Mr. Krabs then wrestles with the Money Dragon where it turns out to be a vacuum cleaner in the real world and the island is not seen again afterward.