The story opens in a mountainous land inhabited by men and goblins. The goblins originally lived with men, but went underground when a former king imposed heavy taxes (or something of the sort) on them. Over time, their hatred and living in darkness corrupted them and they became misshappen and spiteful. After this short background, we are introduced to the Princess Irene, who lives in a big palace apart from her king-papa, and who finds herself going up an old flight of stairs one rainy afternoon. This stair leads to many dusty and unused rooms, and she gets quickly lost. After wandering around for a while, she discovers another flight of stairs, leading up to where an old woman is spinning. The old woman, who is really very, very old, but still rather young looking, befriends the princess, introduces herself as her great-great grandmother and shows her the way back to her nursery, with an invitation to come again.

Her nurse Lottie does not believe that there is an old woman who lives in the third floor tower living with pigeons, just as the old woman said that she wouldn’t. The princess is upset, because real princesses do not lie, but soon gets over it. Shortly afterwards, it stops raining every day and the princess and Lottie go out to walk in the afternoon. Lottie permits the princess a bit too much freedom in exploring and the evening shadows creep up on them. With them come the goblins, who pursue the two of them; in her fear, Lottie takes a wrong turn and gets lost. Fortunately, they meet a young miner, Curdie, who walks them back to the palace-house, protecting them from the goblins with his confidence and with rhymes (which the goblins abhor).

Curdie is an industrious miner with no fear of the goblins (because he can make up rhymes). He also is working a bit late in the mine to earn some extra money to buy his mother a nice warm, red petticoat for the winter. During one of his late night sessions he stops for a break and happens to hear a goblin family talking, and the father refers to a plan to wreck havoc on the sunlit kingdom. Curdie follows the goblin family as they go to a speech by the king and then follows them frequently in the evenings, hoping to overhear some additional information. One evening, however, some of the goblin animals find the pickaxe that he ties his string to find his way back from the goblin kingdom and carry it off, so that when he followed his string, he found himself who-knows-where within the mountain. It turned out to be the goblin king’s chambers and he is imprisoned within the mountain, although he does learn that the goblins are planning to kidnap the princess, and that goblin feet are sensitive.

Meanwhile, Princess Irene takes an opportunity to visit grandmother again. This time her grandmother is in her other room, which has stars and a glowing globe that only a few people can see. The grandmother acts as a loving grandmother, and asks that she come back on Friday, which she nearly fails to do when one of the of the goblin creatures surprises her and, instead of running up the stair, Irene runs outside to the mountain, getting completely lost again. Fortunately, she is guided back by the light of the old woman’s globe. This time the old woman has finished her spinning which turns out to be a ball of the finest thread (spun from spider silk from over the sea). It is connected to a ring, which her grandmother gives to Irene, telling her to put the ring under her pillow and to follow the thread wherever it leads. This she does several days later when, unbeknownst to her, the dog and cat set up a riot outside her door early one morning.

The thread leads out the house, through the garden, and into the mountain. It leads through a number of deserted passages (the goblins are asleep) right into a mound of rocks. The princess becomes frustrated, but, determined to follow the string, she begins clearing the pile, being heartened as the thread tightened as she removed rocks, instead of just lying there. She discovers that the trapped Curdie is on the othe side and removes enough that Curdie can push over the boulder holding him in. But the string leads into Curdie’s prison-cave to a small passageway that neither Curdie nor the goblins had noticed. Curdie does not believe Irene that she is lead by a thread, but since she refused to follow him, he followed her. She leads through a number of caves, through the goblin King and Queen’s bedroom (Curdie takes one of the Queen’s granite shoes that she, he discovers, uses to hide her disfigurement of having toes). She continues to follow the thread around corners, through passages and underground rivers, outside the mountain (where Curdie still cannot see or feel the thread) and right back to her house.

She takes Curdie to see the old woman, but although Irene can see her, all Curdie sees is a tower with a haystack and pigeons, just as the old woman had earlier predicted that some people would. Curdie gets mad at the princess for taking him in and leaves. His mother, however, observes that she had once seen a globe of light from the tower, and notes that princess did act uncharacteristically sure of where she was going. Curdie feels a little bad about his treatment of Irene, but is still dubious.

Curdie’s vigilence in the mine leads him to suspect that the goblins are tunnelling under the king’s house and goes to the palace grounds to investigate one evening, where he is shot in the leg by one of the guards. He is taken to one of the second floor rooms, tries to warn the guards, who think he is raving. Shortly afterward, he has a fever and really does begin raving. He sees the old woman come in a dream and apply a bandage to his leg, and then falls competely asleep.

Meanwhile, the goblins really do tunnel under the house and begin invading. Curdie wakes up, healed, and comes down to discover the king’s mean surrounded by goblins. He frees them by stomping on goblin feet with his iron-soled shoes and gets into a foot-battle with the Queen and her remaining granite shoe. Curdie extricates himself by slashing at the Queens face with his knife, then stomping on her other foot and leaves to join the battle in the basement. Here the steward has been holding off the goblins by giving them the King’s wine as fast as he can and a massive rout of the goblins ensues, with them fleeing back into their tunnel. Unfortunately, the princess is nowhere to be found and is feared to have been successfully kidnapped.

As it turns out, she got scared early on and started following her thread, which led her to Curdie’s mother, so she escaped. Curdie, returning home, is reassured at finding her, and then remembers the goblins’ backup plan: flood the mine. He rushes to tell his father and the other miners just entering the mine, and they set to blocking the entrance to the goblin kingdom. A fierce rain prevents them from returning the princess to her father until the next day, whereupon he is overjoyed and a feast is held. The princess goes to bed early, of course, but interrupts them later in the evening following her thread. Curdie hears a rumbling, suspects a coming flood and requests that the King order everyone onto the mountain. This he does, and shortly after everyone reaches safety, the waters that the goblins unleashed intending to flood the mine, being blocked by Curdie’s foresight, instead flooded the goblin kingdom and came out into the house.

The King took the princess back to the main palace (since the old one was ruined). The King invites to Curdie to become a page, to which Curdie demures, citing love for his parents (although he requests a warm, red petticoat for his mother). The remaining goblins who were not killed in the flood became nicer and eventually became the Scottish brownies.

The Princess and the Goblin is a classic fairy tale, where the world is inhabited by good and evil and children have faerie godmothers. Like many fairy tales, it is written so that children can understand, with simple explanations for the fantastical, but yet containing subtle jokes that will amuse adults. Yet it is also a Christian allegory where the old woman (who could hardly be Irene’s grandmother, as we learn she is 2000 years old) is Christ. Irene represents the believer, who sometimes doubts the existance of her grandmother, but learns to trust her, even though the path that she must take is often counter-intuitive. Curdie may represent someone who becomes a believer, as he doubts at first, but having seen the results of the princess following her thread (and the old woman’s visit in his dreams), does believe. Lootie, who never believes, and in fact, is observed by the old woman to be unable to believe, is a non-Christian.

Allegory can be preachy, but MacDonald does not overdo it and uses it to give some good illustrations about the nature of faith, belief, and obedience. As a fairy tale, however, it is creative and satisfying, and the combination of the two is interesting. Certainly C.S. Lewis found it so, as the professor in The Lion, the Witch, and the Wardrobe incorporates Curdie’s mother’s explanation of why Curdie should not disbelieve Irene almost verbatim. Indeed, C.S. Lewis even has himself led by MacDonald in his spiritual journey in The Great Divorce and said that his discovery of MacDonalds’ writings marked a turning point in his life.

This is certainly a lovely fairy tale. The writing focuses on the characters themselves (Princess Irene’s journey of faith, in particular) but with a robust conflict between good and evil and a not insubstantial plot. The old woman adds a magical element, as she seems to be everywhere, yet always in her tower; always changing, yet ever the same. The story carries the fairy tale ethos well, being at once recognizable as a story about real people in the real world but with important pieces of the story being fantastical. In addition, MacDonald tells it as a father telling it to his children at night, complete with brief explanations and asides to himself. (C.S. Lewis adopted a similar tone in the Chronicles of Narnia.)  All in all, it is a story that will delight readers of all ages with the lovable and characters whom they can immediately identify with, and the creativity of the events that transpire.