The Low Lantern is a tavern on board a ship in south Baldur's Gate.
There are two sub-quests involving the Low Lantern. On the second deck down Desreta will approach you. If you accept her offer of entropy she and her companion Vay-ya will attack. Killing them will get you a combined total of 3600 xp and numerous items. On the third deck is Yago. Annoying him will cause him to attack, and killing him will get you 1400xp. You can then collect his book of curses and give in to Brielbara in the Splurging Sturgeon in order to complete her quest.
There are also some locked chests and drawers for you to raid.