Underwater Challenge is the fifth and final Challenge Act of Seaside Hill Act 1 in the console/PC version of Sonic Generations. It is unlocked after clearing every Stage in the Dreamcast era and is playable only as Classic Sonic.
The Act takes place in a slightly modified version of Seaside Hill Act 1, overflowing with crushing pillars and a large amount of underwater space. The player must hit switches throughout the Act in order to be able to progress forward.
The player begins inside the temple section of the Act, standing just in front of an underwater section which they must enter. After continuing forward, the player will reach a fan, which they must use to travel upward before going to the right to hit a switch. Once this switch has been pressed, the player can ride the newly-activated fans back to the left, and take a higher fan up to the next section.
The player will soon travel to the right and briefly end up above water, where there will be a Star Post. After entering the water again, the player will be taken to a section with moving pillars that can crush them, slowing them down significantly. The player must avoid the pillars, wait for the second one to go back into the ground, then hit a switch under two platforms.
The player will soon come across another switch, which must be activated in order to cause two horizontal pillars to begin moving, which the player can then jump from to reach the next section. After jumping up another handful of platforms, the player will need to activate one final switch, then jump off of the pillar it raised onto a nearby spring which will take them out of the water. From there, they need to jump over two sets of spikes before reaching the Goal Plate.