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The Mechanical Arm is the very first obstacle Mickey faces in Epic Mickey, within Dark Beauty Castle. It's a machine reassembling a Swiss army knife the Mad Doctor used as an attempt to extract Mickey's Heart. The Mechanical Arm has one eye (blue when docile and red when hostile), a large metallic claw hand and wields various sharp utensils, from scissors, a corkscrew, a chainsaw, and finally a plunger under the manipulation of the Mad Doctor. Fortunately, Mickey escaped his bonds and tried to confront the Mad Doctor, who then used a hatch to escape.
Oswald attempted to follow after the Mad Doctor to escape from Mickey, but he broke a lever on the main controls that manipulated the Mechanical Arm and it overloaded. This caused the Mechanical Arm to go haywire, furiously grabbing and clipping for Oswald with its scissors, corkscrew, chainsaw, and metallic claw before he barely managed to escape. The Mechanical Arm then turned its attention back to Mickey and attempted to kill him, but with the help of Gremlin Gus, the machine was shut down when the control panels were destroyed.
When Mickey returns to Dark Beauty Castle to defeat the Shadow Blot, the only thing remaining of the Mechanical Arm is its eye. The rest of its body was presumably washed away by the overflowing thinner in the room.
The Mechanical Arm attacks Mickey with its corkscrew if he is in its line of sight. It was noted that the Arm never used its large, metallic claw when fighting Mickey, but only used it when attempting to crush Gremlin Gus!