In a small medieval village, Katie, the beautiful daughter of the local miller, dreams of being married to a king, living in a castle, and justly ruling the land. As Katie sings of her desires, she notices a man on a white horse admiring her from across the pond. The man is Prince Henry, son of King Mezzer and Queen Grizelda. Prince Henry tells his companions to refer to him only as “Henry,” so that people will not know who he really is. Soon, King Mezzer’s men come to collect taxes, taking the miller’s only sack of grain. Victor, the miller, argues that he cannot feed his family without the grain, and that he has already paid the king seven sacks of grain this year, but the collectors ignore him. However, Prince Henry arrives and orders them to let the miller keep his grain. Henry also compliments Katie on her singing voice. She becomes smitten. Meanwhile, the miller lies to his friends that his daughter can spin straw into gold on her spinning wheel, and rumors spread throughout the village. When word gets to King Mezzer, he sends for Katie and demands she spin a bale of straw into gold for him. Locking her in a room with a spinning wheel, he orders the job to be done by the next day. Queen Grizelda warns that she will be punished if she does not accomplish the task. As Katie cries, wondering how she can perform this impossible task, Rumpelstiltskin, a magical elf, appears, inquiring about her tears. He offers to spin the straw into gold in exchange for the necklace Katie wears around her neck. They agree to the deal and Rumpelstiltskin quickly spins the bale of straw into golden thread. After the elf departs, Prince Henry comes to check on Katie and is astonished by what she has done. King Mezzer is equally amazed, offers Katie a royal title if she can perform the golden feat again, and locks her in the room with a dozen bales of straw. Katie calls out to the magical elf, whose name she does not know, begging for help. Rumpelstiltskin appears and offers to perform the task in exchange for the gold ring Katie is wearing. She agrees, and Rumpelstiltskin spins the straw into many barrels of golden thread. The king is delighted by this new wealth, but invokes an ancient law which decrees that a person must prove her heart is pure three times. If Katie can spin straw into gold a third time, she can marry his son. However, the queen reminds Katie that if she fails, she will be killed. The king fills a room with dozens of bales of straw. Meanwhile, the queen sends a young mute girl named Emily to hide in the room to determine how Katie is performing her golden feat. Katie calls to the magical elf once again, but also discovers Emily spying on her. Rumpelstiltskin agrees to spin the straw again, but since Katie has nothing to offer in exchange, he suggests that she pledge to give her firstborn child to him. Katie reluctantly agrees to the deal. Rumpelstiltskin spins the straw into gold, King Mezzer faints upon seeing all the gold, and Katie declares that she does not want to spin ever again. She and Henry are married, but she is haunted by worries of giving up her firstborn child. A year later, she gives birth to a son, John, and the elf appears, demanding the infant but Katie protests. Rumpelstiltskin’s talking pet raven suggests he create a contest for the child. If Katie can guess the elf’s name in three days’ time, she can keep her baby. If not, she must give up the infant as previously arranged. On the first day, Katie lists many names, but none are correct. On the second day, she goes through many books listing names, but, again, cannot find the right one. That night, Katie sends two of the king’s man, Alf and Ralph, to spy on the elf, hoping they will learn his name. In the meantime, Rumpelstiltskin’s talking raven flies to the young mute Emily’s bedroom and tells her the elf’s real name. Emily struggles to say the word aloud, but cannot form the sounds. On the third day, the elf comes to the castle prepared to take the baby. However, Emily finally finds her voice and reveals his name to Katie. When she says Rumpelstiltskin’s name aloud, the elf becomes enraged. The castle floor opens and the elf falls into the deepest recesses of the earth. As the floor closes, Prince Henry rushes in to be with his wife and newborn son.