Shrouded in atmosphere, Cthulhu's standing (5)
I believe the answer is:
erect
'standing' is the definition.
(similar in meaning)
'shrouded in atmosphere cthulhu's' is the wordplay.
'shrouded in' says the answer is hidden in the clue.
'ERECT' is hidden within 'atmosphere cthulhus'.
(Other definitions for erect that I've seen before include "Found" , "Unbowed" , "Crete (anag)" , "Build - straight up" , "Upright; construct" .)