In the rural village of Lower Hexham, young Mollie Cloverall spends her days doing chores and watching her baby brother, Thomas, resenting the burden his birth has placed on her. The villagers fear the Kinde Folke, malicious fairy-like beings whom everyone calls "kind" to avoid provoking them. If the Kinde Folke learn of a beautiful baby boy, they steal him and leave a changeling in his place. To protect Thomas, visitors deliberately insult his appearance, since the Kinde Folke's spies are always listening. A feared local healer named Granny Hedgepath has given Thomas a silver locket to wear at all times, warning it must never be removed.
One afternoon, Thomas pulls off the locket during a game and hands it to Mollie, who fastens it around her own neck. She carelessly praises Thomas aloud, calling him the prettiest baby. A strange darkness falls, and Mollie collapses. When she wakes, the baby is screaming and violent. Their mother, Mam, sends Mollie to fetch Granny, who reveals the truth: The Kinde Folke have taken Thomas and left a changeling. She discovers the locket around Mollie's neck and accuses Mollie of praising Thomas and drawing the Kinde Folke's attention. Granny insists Mam must nurse the changeling, since Thomas's fate depends on the changeling's treatment. When Mollie's father, Dadoe, sees the changeling, he is horrified and eventually abandons the family.
Over the following year, Mam names the changeling Guest and cares for him, but the effort drains her strength. When Granny admits she never guaranteed the Kinde Folke would return Thomas, Mollie conceives a desperate plan: She will carry Guest to the Kinde Folke, trade him for Thomas, and bring her brother home. That night, she writes Mam a letter and slips out with Guest on her back.
At the stone bridge, the peddler, an old traveling merchant Mollie has known all her life, warns her not to continue. She lies and presses on past a haunted crossroads and into Mirkwood, a dark forest bordering the Kinde Folke's territory. Deep in the woods, she meets Madog Ashe, a mysterious wanderer who communicates with Guest in a strange clicking language. Madog warns Mollie the Kinde Folke will never agree to a trade. He reveals the locket is iron coated in silver, poisonous to the Kinde Folke, and tells her to keep it close for protection. He demonstrates that Guest can speak, walk, and eat solid food, and explains that Guest's screaming at home stemmed from the pain of digesting human breast milk.
At a signpost, Madog departs, instructing Mollie to listen to Guest, who was born in the Dark Lands, the Kinde Folke's realm, and knows its dangers instinctively. Mollie and Guest cross into the Dark Lands, where color fades and time becomes unreliable. Guest shares memories of a Kinde Folke mother who hurt him and notes that neither Mollie nor Mam ever showed him kindness. Mollie begins to see Guest differently, noticing his gentleness and rapid growth.
The Kinde Folke send increasingly dangerous obstacles. Tinies, lantern-carrying creatures known as will-o'-the-wisps, try to lure Mollie into swamps, but Guest warns her and she drives them off with the locket. An illusion resembling Granny offers Mollie a poisoned "elixir," but Guest knocks the bottle away. During a storm, a Pooka, a shape-shifting water spirit disguised as Madog, lures Mollie onto a horse that plunges into a lake to drown her. She presses the locket against the creature and breaks free; the real Madog arrives and scolds her for ignoring Guest. Later, a Kinde Folke illusion of Thomas transforms into a wolf that pins Mollie down. She destroys it with the locket and escapes.
Aidan, Madog's hostile son, arrives with food. The three travel until they reach a hilltop ringed with standing stones, where the queen of the Kinde Folke appears. Thomas is brought forward as a boy of seven or eight called Prince Tiarnach, dressed in velvet, with no memory of his family. He refuses to leave. When Mollie insists, the queen vanishes and Mollie falls unconscious.
Madog returns and builds a protective ring of fire. Figures appearing to be Mam and Dadoe lure Mollie over the fire, then dissolve into Kinde Folke who trap her in an enchanted dancing circle. Guest's distant shout breaks the spell, and she scatters the dancers with the locket.
A Kinde Folke girl named Aislinn, Guest's half-sister, reveals that Guest's father is Madog. She explains that every seven years the Kinde Folke must sacrifice the bonniest mortal boy to Cernunnos, the Dark Lord, and Thomas was stolen for this purpose. Tonight he will be crowned king and then killed. Afterward, the queen will lead the Wild Hunt, a supernatural host of hunters, to kill Mollie and her companions. Aislinn gives Mollie an invisibility cloak woven by her mother, Lady Duatha. The plan requires Mollie to enter the stone circle unseen, wait for Aislinn to drug Thomas's wine, then carry him out.
At nightfall, Aislinn leads the invisible Mollie into the celebration with beeswax in her ears to resist the music. Aislinn slips a sleeping potion into Thomas's goblet. When he falls asleep, Mollie wraps the cloak around him and carries him into the forest. Reunited with Aidan and Guest, the group mounts Kinde Folke horses and flees as the Wild Hunt closes in. The queen demands Thomas, but Madog knocks her from her horse. Mollie hurls iron balls at the pursuing Kinde Folke, burning and scattering them. The queen curses Madog but retreats.
They escape into Mirkwood, where Aidan demands Madog abandon the others. Madog refuses, and Aidan rides off alone. The voice of Cernunnos erupts in a supernatural storm, declaring the Kinde Folke broke their vow by failing to deliver the tithe. He destroys their power and scatters them across the world. Madog confirms they are now mortal, though some may seek revenge.
At the edge of Lower Hexham, Madog parts from them, telling Guest he is his father and will visit often. After Madog rides off, the peddler appears with his cart, and both Guest and Mollie realize the peddler is Madog in disguise. Madog is a traveler, a type of supernatural being with the gift of changing appearance. He warns that Guest must be treated well.
Mam and Dadoe welcome Mollie joyfully but do not recognize Thomas, now seven or eight years old. His velvet suit has disintegrated into leaves and mud, revealing his finery was always illusion. Granny confirms the boy is Thomas, aged by his time in the Dark Lands. Dadoe is furious when Guest appears, but Mollie pleads for him, and Guest speaks politely. Mam persuades Dadoe to let him stay.
Weeks pass with Thomas refusing to acknowledge his family. Aislinn and her mother, Duatha, arrive as beggars, sent by Madog. They tell Thomas the Dark Lands are destroyed, the Kinde Folke are beggars, and he was stolen solely to be sacrificed. Thomas weeps and begs to go with them, but Duatha refuses, placing his hand in Mollie's. Before leaving, she warns Mollie that some Kinde Folke still seek revenge. After they depart, Thomas watches them go in grief, then slowly walks to the bench where Mollie and Guest sit. He leans against Mollie's shoulder, and the three sit together in silence, a tentative moment of connection shadowed by lingering danger.