The Party Tree was in the center of a large field south of Bag End.

For the joint birthday party of Bilbo and Frodo Baggins, a massive pavillion was set up that was large enough to encompass the Party Tree. The tree stood at the head the central table and the tree's branches were used to hang lanterns in.

It was under the Party Tree that Bilbo gave his speech in which he told about his plans to leave Bag End.

When Samwise Gamgee returned to the Shire after the War of the Ring, he was very upset to find that the Party Tree had been cut down and left to rot in the field. In its place, he planted the silver nut Galadriel had given him. Later on, the sapling of a mallorn tree emerged in the place of the Party Tree.

Information provided by Mark Hoff.
Encyclopedia entry originally written by Nienna-of-the-Valar