This article is from the Final-Fantasy and other Square Soft Games FAQ, by firstname.lastname@example.org (Nick Zitzmann) with numerous contributions by others.
You must find a way to prevent all of your characters from being struck
wounded from his Ultima attack when MagiMaster runs out of HP.
There are several ways of doing this:
1. If you finished the Phoenix Cave before you entered here, and one of
your characters has all the Phoenix's spells, have him/her cast Life 3
on some party members so they will rise up again after Ultima knocks
2. Buff a character up so they will totally ride out the spell when it's
cast. The Muscle Belt helps here, if you have it.
3. The MagiMaster is a magic creature, and like all magic creatures, he
dies when he runs out of MP. Use Rasp to drain his MP, and Osmose when
your character's low on MP due to all of the Rasping. When MagiMaster
reaches 0 MP, he'll cast Ultima, but won't have enough MP to cast it, so
he'll perish without laying a finger on the party.
4. There's one other way. Use magic to weaken MagiMaster, and when the
MagiMaster is critically low on HP, have one character use the Palidor
Esper. The characters will jump into the air, and if the MagiMaster is
defeated with at least one character still in the air during the fight,
the character(s) in the air won't even be scratched by Ultima, so you
will win the fight. Caution! If you try this, do **not** equip your
Palidor-equipped person with the Gem Box. The Gem Box disables Espers
from being used by its bearer...