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Much like the equally infamous Clown Doll, the Gnarled Tree was actually acting as a distraction by the other ghosts and as Robbie's parents struggled to save their son from the Gnarled Tree, the other ghosts quickly kidnapped Carol Anne and took her to the spirit realm.
The Gnarled Tree was ultimately sucked into a passing tornado and seemingly perished - though whether it was ever truly alive or not is still left largely to the imagination of the audience.