The Iron Hammer is a melee weapon that can be obtained in Phoenotopia and Phoenotopia Awakening. It can be bought in a shop in Atai and is essential to making progress later in the game. The Hammer is a step up from the Wooden Bat and deals more damage, making it easier to deal with some of the tougher enemies.
Due to its in-game description, it was once thought by fans that the Iron Hammer was meant to be used for some secret sidequest, like fixing Atai Bridge. This was debunked by the developer, as no such quest exists in the game.