As a war galley braves a tumultuous storm, two dragons clash in the sky, resulting in the defeat of one. In the kingdom of Enlad, the royal wizard Root delivers a grave warning: the dragons symbolize a disruption of balance in the world. Meanwhile, the king faces an outbreak of disease ravaging his realm and the mysterious disappearance of his son, Prince Arren. In a tragic turn of events, Arren kills his father, seizes the royal sword, and escapes the castle.
During his perilous journey through the desert, Arren is nearly overrun by wolves but is saved by the archmage Sparrowhawk. Together, they venture to Hort Town, where Arren bravely intervenes to rescue a young girl named Therru from the clutches of the slaver Hare, only to find himself captured in the process. His father’s sword is lost to the depths of the sea. Sparrowhawk, demonstrating courage and resourcefulness, rescues Arren once more and takes him to a farm owned by Sparrowhawk’s oldest friend, Tenar, who cares for Therru.
Sparrowhawk’s heroic actions against Hare’s slave caravan provoke the ire of Lord Cob, a formidable warlock ruling over Hort Town. In a bid to restore the broken equilibrium, Sparrowhawk explains to Arren that he is seeking a way to mend the turmoil. He purchases Arren's sword from a merchant, skillfully avoiding capture by Hare as he gathers intelligence about Cob’s ominous castle.
Haunted by his dark past, Arren confides in Therru, revealing he killed his father and feels a foreboding presence trailing him. This presence manifests as a mirror image of himself, driving him to desperate flight that lands him unconscious in a swamp. Cob seizes the opportunity to ensnare him, manipulating Arren into disclosing his true identity, Prince Lebannen, to maintain control over him. Meanwhile, Hare captures Tenar as a pawn to entice Sparrowhawk into a trap, leaving Therru tied and helpless. However, Therru manages to free herself, and Sparrowhawk entrusts her with Arren's sword.
Sparrowhawk boldly infiltrates the castle to save Tenar, uncovering Cob’s nefarious plot: he is deliberately destabilizing the world by opening the gateway between life and death to attain eternal life. Cob sends Arren to kill Sparrowhawk, but the archmage frees the young prince from Cob’s grip, only to be captured himself.
In a dramatic twist, Therru encounters Arren's doppelgänger in the castle, who reveals he embodies the light of Arren's true self and shares with her his genuine name. Therru learns about the impending execution of Sparrowhawk and Tenar at sunrise. Driven by love and hope, she finds Arren, whose heart is heavy with guilt, and reminds him of his true identity while revealing her own true name, Tehanu.
Fueled by newfound courage, Arren confronts Cob and finally draws his sword, which had been magically sealed. He successfully severs Cob’s staff-holding hand, rendering the dark sorcerer powerless, and Cob begins to age rapidly. In a last desperate attempt, Cob captures Therru and retreats to the castle’s highest tower, seeking to extinguish her life. Yet, as Therru appears to perish, she reveals her dragon form, possessing the gift of everlasting life. In a fierce battle, she vanquishes Cob and saves Arren.
As Sparrowhawk and Tenar exit the castle, Therru and Arren descend into a tranquil field, where Therru reverts to her human form. Arren expresses his intention to return home to seek redemption for his past actions but promises to reunite with Therru one day. He and Sparrowhawk set off for Enlad, bidding farewell to Therru and Tenar. With renewed hope, Therru gazes upward, witnessing her fellow dragons flying gracefully above, a sign that harmony has been restored to the world.
