In the canyon, head to the large round thing just to the north. You'll find yourself on a pathway that branches 3 ways. Take the right path.
On the righthand side is a shell house with a Guard Source in it. Further on is another shell house with an Elixir in it and some beds where you can rest for free. Behind the beds there's a hidden Enemy Skill. Go back to the entrance and take the left path.
If you haven't already rested, go back to the house with the beds and choose to rest. Head back to the entrance and take the center path. Keep going forward until you come to a large shell house. Inside you'll find a Comet at the top of the spiral. Go back to where there's a break that allows you into the center of the spiral. This leads to a crystalline spiral stair that takes you down to a strange city.
Aeris is there, praying. Cloud approaches her alone but then Sephiroth takes control of Cloud again and attempts to force him to kill Aeris. Your teammates bring him back to his senses, but then Sephiroth leaps in and kills her himself. Sephiroth then flies off but leaves behind Jenova-LIFE for you to fight.