Little Billy is an imaginative and curious young boy who longs for adventure beyond his highly restricted life at home. Tired of constantly trying to be "good," he is deeply tempted to explore the nearby Forest of Sin despite his mother's terrifying warnings about monsters. His natural bravery and resourcefulness begin to emerge when he finally crosses the boundary and encounters the hidden wonders of the woods.

Don Mini is a tiny old man with a white beard who serves as the Ruler of the Minpins, a society of miniature people living inside the trees of the forest. Wearing old-fashioned clothes and special suction boots, he acts as a welcoming mentor to Billy. He shares the secrets of his people's survival, explaining how they ride birds and avoid the forest floor to stay safe from predators.

The Gruncher is a massive, deadly monster that prowls the Forest of Sin. Enshrouded in a thick cloud of smelly smoke created by the boiling fire in his belly, the beast hunts entirely by using his keen sense of smell. He is a persistent terror to the forest's inhabitants, preferring the taste of human children over the tiny Minpins.

Billy's Mother is a protective parent who enforces numerous rules to keep her son safe from harm. She uses frightening cautionary tales about the beasts in the Forest of Sin—such as Whangdoodles and Snozzwanglers—to compel his obedience. Though well-meaning in her desire to protect him, she is somewhat distant, often calling from another room while doing housework, and does not understand his adventurous spirit.

Swan is the largest bird in the Forest of Sin. Like the other birds in the forest who carry the tiny Minpins on their backs in exchange for winter food, Swan is a willing helper to the forest dwellers. Although Swan cannot speak human languages, the giant bird forms a bond of trust with Billy, providing the boy with a thrilling sense of flight.

The Devil acts as a disembodied voice that tempts Little Billy to break his mother's strict rules. Whispering promises of a wonderful place full of delicious strawberries and zero monsters, this figure encourages Billy's natural urge to rebel. He serves as a whimsical personification of the boy's inner desire to seek adventure and make his own decisions.