The book opens with the enchanter Dallben sending off Princess Eilonwy to finish the task of becoming a princess that Achren had begun. To see her off, Taran and Gurgi journey with her to the Isle of Mona, along with the incompetent and clumsy Prince Rhun of Mona, whom they meet on the ship. Upon landing they are met by the King and Queen of Mona, the latter of which hustles Taran off to the castle tailor and cobbler to get his shoes and cloak in a presentable (for royalty, anyway) state. It seems that the old cobbler is really Prince Gwydion in disguise, seeking to discover exactly what the danger is that he fears for Eilonwy. The erstwhile Fflewddur turns up in the stable after having been turned out by the steward Magg for his lackluster tunes. This steward is seen by Taran late at night quietly exiting the castle via a small exit and Taran, eager to prevent harm to Eilonwy, rashly follows. He sees the steward signal a ship at see and is roughly rescued from discovery by the returning steward by Gwydion.

Taran stands guard over Eilonwy’s room but in the morning, eager for adventure and already frustrated with the petty castle women, she is hustled off by Magg while Taran isn’t looking. A search party is made and the King of Mona confides his sorrow at his son’s complete failure to succeed at anything he puts his hand too, requesting that Taran watch over the Prince. Of course, the Prince quickly becomes separated from the party, as do Taran, Gurgi, and Fflewddur, who seek him out. They find him the next morning in a little cottage and despite the advice of Fflewddur, who smells enchantment (and as usual, wants none of it), they tarry to examine a journal of the midget Glew. This Glew, apparently long dead, wanted to become larger and experimented with potions on his cat, who eventually did become larger. Very visibly so, as the cat, Llyan returns, trapping them until put to sleep by Fflewddur’s harp (apparently one of few to appreciate his skill).

Having fled, they discover Eilonwy’s bauble and trances of a boat being dragged to the river, but having none of their own, they tie together a makeshift raft to escape from the pursuing of Llyan (who is detained by the attacks of Taran’s crow, Kaw). The raft breaks up and they promptly lose the accident-prone Prince to a sinkhole while repairing it. The rescue ends them all in a cave, where Taran discovers that he can make Eilonwy’s bauble glow by thinking thoughts of her. However, no exit is to be found, only the giant Glew who was trapped in the cave after having drunk one of his potions while fleeing from Llyan. Now he complains of being too big to get out of the cave and has concocted a new potion that he thinks will work, needing only the life of one of them (“it doesn’t matter which, I’m terribly sorry”). A quick and rather accidental rescue by Prince Rhun saves them (by thinking selfless of saving the others and causing the bauble to glow and blind Glew) and they discover that the journal with empty pages is really a book of magic, whose spells are revealed by the bauble.

At the shore they run into Gwydion who is planning to row out to Caer Colur, the ancient castle of Eilonwy’s family, now ruined and separated from the main island. The castle was the treasure place of enchantments controllable only by Eilonwy’s family (now all dead except for her), once used by them to greatly benefit the people. Achren seeks to use the enchantments through Eilonwy as a proxy to regain control of Prydain, which we discover was once ruled by her before she shared it with Arawn (who then stole it from her). Upon reaching Caer Colur, Taran climbs Eilonwy’s tower to rescue her, only to discover she is enchanted by Achren. She promptly calls for Achren and the party, after a brief fight, is taken before haughty Achren (and an even haughtier Magg) in the great hall. Achren returns the spellbook and the bauble to Eilonwy, telling her to destroy the party. Eilonwy, however, chooses to destroy the book of spells, her family’s power, ending all hope of her becoming an enchantress. Magg, betrayed by Achren once she was (prematurely) sure of her regained power, floods the castle. The party ends up safely on the beach, including Achren, who was prevented from committing suicide by Gwydion and promised a safe haven by Dallben should she choose to seek it. Eilonwy returns to the castle of Mona to learn the fine art of being a princess and the rest return to Caer Dallben, but not before Taran receives the gift of a horn from Eilonwy in exchange for a promise not to forget her.

This, the third book in the series, continues to mainly chronicle Taran’s development. No longer is he the foolish and impetuous youth of The Book of Three, but now frequently shows restraint and occasionally wisdom and is generally valued for his valor of the previous books. (Foolishness and impetuosity are not absent, however)  The events on Mona quite tax him, however, as not only is his love (which he only vaguely realizes in the beginning) leaving Caer Dallben, it turns out that Rhun’s parents intend to betroth he and Eilonwy. Having given his promise to the King, however, Taran obliges himself to continue helping Rhun, pained as he is by the knowledge that the undeserving Rhun will get Eilonwy. For his part, Rhun learns that true leadership is not just yelling commands, and realizing that Taran is much more deserving, disclaims his claim on Eilonwy (an easy task since he had little desire for the marraige in the first place). Eilonwy, although mostly absent, makes the painful choice to give up her dream of being an enchantress, much as Taran gives up hope for his relationship with Eilonwy when he commits to protecting Rhun. Although no formal expressions of love are exchanged between Taran and Eilonwy, the growing realization of how much he does love her occupies a large portion of his thoughts throughout the book and is really the main theme of the book. Eilonwy, characteristicly, appears to never have been in doubt about her feelings.

The sad history of Prydain further unfolds through the character of Achren.  Originally presented as a mere parter of Arawn and disliked guardian of Eilonwy in The Book of Three, she now becomes much more malignant and evil. She was always Eilonwy’s guardian for her potential power, but was kept from carrying out her plan because she did not know that it was the bauble that unlocked the secrets of the house of Llyr. Nor is she less evil than Arawn himself: in her long reign life was almost as joyless as it would be under Arawn and now she seeks to use Eilonwy as the gateway to regaining that power. However her power is shattered by the events at Caer Colur and she is effectively pardoned by Gywdion, who does not seek justice for past crimes but seeks the restoration of her spirt, an ongoing theme of the series.