Spoilers for those who dont want to know STOP READING NOW.
There are 5 items required to make the staff, as well as the recipe.
The Black Mushroom is Act 1 in the first areas of the cathedral. youll find it on the first floor if it spawns (very rare).
the 2nd item is also in act 1, rare spawn inside leorics manor there is a fireplace that you can click on, Leorics Shinbone will drop (this one is pretty easy as theres a quest right after the manor and you can just walk right up, clear it out and try again)
the third item is in Act 2 there is a rainbow liquid.... this one is pure unadulterated BS.... its in a random dungeon, that only spawns in one area at the very southern end of the oasis..... I DID LIKE 100 GOD DAMNED RUNS BEFORE THIS STUPID DUNGEON SPAWNED THE FIRST TIME..... AND THE LIQUID ISNT A GUARENTEED DROP INSIDE.....
the 4th item is also in Act 2. Wirts Bell is SOLD by Squirt for 100,000 gold on her potions tab.
the 5th item is another major pain in the ass just like the rainbow liquid in act 2. The Gibbering Gemstone in Act 3. inside the fields of blood you will find the Caverns of Frost (not to be confused with the Ice Caverns of which there are many). There is a unique named monster in there named Chiltara. Heres the catch, Chiltara is an uncommon spawn in a rare spawn dungeon... you do the math.
the last item is the recipe.... a RARE ASS DROP from Izual in act 4, nearest checkpoint to him is the GOD DAMN BEGINNING, so its not the most fun farm.
The good news... you do not need to farm the items more than once. after completing the staff all you have to do is defeat diablo in that difficulty to make use of it.
Once you have the staff, in Act 1 right outside of the town on the way to old tristram, there is an area with a huge chasm on the right side. If you have the staff and get near it, it will turn all rainbowy, thats where Whimsyshire is.... and nothing can prepare you for what you will find inside of there.
*EDIT* I misspoke, you do not automatically get to use the staff. It upgrades (i totally forgot as its been over a year since i played diablo 3), but you can buy a recipe, for 100,000 gold, that will upgrade the staff from Staff of Herding, to Nightmarish Staff of Herding, Hellish Staff of Herding, and Infernal Staff of Herding. Those are the keys to each difficulties Whimsyshire
PSN: Mattrickxx EWGF posted.... Wow, you actually rommeled Nug'z right in the gustavons. Maximum Over-Rustle.