Instructions
Press "X" to talk to Dadge inside the laboratory.
Click the "Freeze" option.
Click the names of the two monsters you want to breed. You need to freeze both of the monsters before you can breed them.
Press "X" to talk to Dadge again.
Click the "Combine" option.
Click the name of the monster you want to be the first parent. This parent determines the species of the offspring. If you choose a Dragon as the first parent, the offspring is always going to be a Dragon.
Click the name of the second parent. This parent determines which subspecies of the offspring. For example, choosing a Pixie as the second parent with a Dragon first parent produces a Tiamat, a subspecies of Dragon.
Press "X" to confirm your selection. The parent monsters are removed from the freezer and a new offspring produced instantly.