After the Dark Lord Morgoth is defeated, the Elf Finrod dies searching for Morgoth's servant Sauron. Finrod's sister Galadriel vows to continue the search and finds an abandoned fortress in the northern wastelands of Forodwaith which bears Sauron's mark. Her companions insist on returning to the Elven capital Lindon where High King Gil-galad proclaims the war against Morgoth's forces to be over. He grants Galadriel and her company the honor of sailing to Valinor where they can live an eternal life at peace. In the Southlands of Middle-earth, Elves watch over Men descended from allies of Morgoth. To the disapproval of the other Elves and Men, the Elf Arondir has grown close with the human healer Bronwyn. Together they discover that the village of Hordern has been destroyed, while Bronwyn's son Theo finds a broken sword bearing Sauron's mark. Near Valinor, Galadriel chooses to turn back and continue the search for Sauron, jumping from the ship into the Sundering Seas. At the same time, two Harfoots, Nori Brandyfoot and Poppy Proudfellow, discover a strange man inside a meteor crater. ("A Shadow of the Past")

Swimming back to Middle-earth, Galadriel comes across a raft with human survivors of a shipwreck. They are attacked by a sea monster and only one survives—Halbrand of the Southlands who is fleeing from Orcs. He and Galadriel work together to survive a storm. Nori and Poppy keep the Stranger hidden from the other Harfoots and give him food and shelter. He does not speak their language but uses fireflies and apparent magic to indicate that he is searching for a constellation of stars that Nori does not recognize. Arondir investigates tunnels beneath Hordern and is captured. Bronwyn returns to her own village, Tirharad, where an Orc attacks her and Theo. They kill it and convince the rest of the town, including Waldreg the tavern owner, to leave. Gil-galad sends the half-Elf Elrond to Eregion to assist the great Elven-smith Celebrimbor, who is planning to build a powerful new forge. Elrond suggests they seek help from the Dwarves and goes to his friend Prince Durin IV in Khazad-dûm. Durin IV is angry that Elrond has not visited in 20 years, but his wife Disa convinces him to hear Elrond's proposal. ("Adrift")

Galadriel and Halbrand are picked up by a ship captained by Elendil. He takes them to Númenor, an island kingdom ruled by Men descended from Elrond's brother Elros. Relations between the island and the Elves have grown strained, and Queen Regent Míriel denies Galadriel's request for a ship back to Middle-earth. Galadriel visits a library of lore with Elendil and discovers that the mark of Sauron is actually a map of the Southlands where a new realm for evil forces is planned. She also learns that Halbrand, who is imprisoned after fighting some Númenóreans, is heir to the throne of the Southlands. In the Southlands, Arondir has been captured by Orcs and taken to a construction camp digging underground passages. His Elven compatriots have also been captured and are killed during an attempted prison revolt. Arondir is taken to the leader of the Orcs who they call Adar, which means "father". As the Harfoots prepare for their seasonal migration, the Stranger is revealed to them all while trying to read some star maps. They let him join them and he pushes Nori's wagon since her father is injured. ("Adar")

Míriel refuses to help defend the Southlands and has Galadriel imprisoned. Adar releases Arondir with a message for the Southlanders: forsake their claim to the area and swear fealty to Adar, or be destroyed. Theo returns to Tirharad for supplies and is attacked by Orcs who are searching for the broken sword. Arondir saves him. Waldreg tells Theo that the sword is a gift for Men from Sauron. In Eregion, the Elves and Dwarves begin building the forge. Elrond learns that Durin IV has been mining a powerful new ore, mithril, and promises to keep this secret. Galadriel escapes prison and goes to the tower of King Tar-Palantir, who is in ill health. Míriel explains that there was a rebellion because the king wanted to renew relations with the Elves, and Míriel was placed on the throne. This gave her access to a palantír (crystal ball) that showed her a vision of Númenor being destroyed in a great tsunami. She believes Galadriel will bring this about, but when the petals of Númenor's White Tree begin to fall Míriel sees this as a sign from the Valar and instead decides to accompany Galadriel to the Southlands. ("The Great Wave")

The Harfoots are saved from a wolf attack by the Stranger, who injures himself using magic to scare the wolves off. He later uses more magic to heal himself and nearly hurts Nori in the process, frightening her. In the tower of Ostirith in the Southlands, Waldreg convinces half of the refugees that they will be better off joining the Orcs. Theo shows the broken sword to Arondir who believes that it is some sort of key designed to enslave the Southlanders. In Lindon, Gil-galad reveals to Elrond that he knows of the existence of mithril and believes it can counteract the fading power of the Elves in Middle-earth. Elrond tells Durin IV and the pair return to Khazad-dûm to try convince his father, King Durin III, to help the Elves. As the Númenoreans prepare to depart for Middle-earth, Tar-Palantir warns Míriel not to go. Galadriel tells her that Halbrand will be accompanying them to claim the throne of the Southlands, but he does not want to and accuses Galadriel of using him. Galadriel later apologizes and opens up to him, and Halbrand eventually agrees to go. Númenor's ships depart for the Southlands. ("Partings")

Adar and his Orcs find Ostirith abandoned but this is a trap and Arondir collapses the tower on them. He and the refugees return to Tirharad to prepare for the next assault while Galadriel, Halbrand, and the Númenóreans make their way towards the Southlands. Arondir is unable to destroy the broken sword and hides it instead. That night, a group of Orcs enter Tirharad and are killed by the townspeople, who are horrified to learn that some of the enemies they just killed were the people who followed Waldreg. Orc archers fire on the town and wound Bronwyn. Adar arrives and Theo reveals the location of the broken sword to save Bronwyn's life. Adar attempts to flee as the Númenóreans arrive on horseback and kill or capture the remaining Orcs. Galadriel and Halbrand capture Adar and interrogate him. Halbrand is hailed as the King of the Southlands. Theo realizes that the broken sword is missing: Waldreg has it and uses it to unlock a dam beside Ostirith, sending water through the Orcs' tunnels and into a lava chamber beneath the mountain Orodruin. The resulting eruption covers the Southlands. ("Udûn")

Galadriel wakes up, covered in ash and surrounded by fire, and finds Theo. Míriel loses her eyesight, and Elendil's son Isildur is presumed dead. The Harfoots arrive at their destination, an orchard that has been destroyed by the nearby volcano. The Stranger attempts to fix it but endangers Nori and her sister. Scared, the Harfoots send him away, only to find the orchard regrown the next day. A trio of mysterious women arrive in search of the stranger and destroy the Harfoots's caravans when Nori attempts to misdirect them. Galadriel and Theo are reunited with Bronwyn, Arondir, and a gravely injured Halbrand. Galadriel takes him to receive Elvish medicine while the Númenóreans depart on their ships. Míriel vows to return for revenge. Meanwhile, Elrond and Durin IV fail to convince Durin III to help the Elves. They are caught mining mithril in secret and Elrond is banished, taking a small piece of mithril with him. Durin IV is stripped of his royal status and Durin III seals the mine. Unbeknownst to them all, a Balrog lives deep below the mine. The Southlands, now a land of Orcs, is renamed Mordor. ("The Eye")

The three women find the Stranger and tell him that he is Sauron. Galadriel and Halbrand arrive in Eregion and the latter receives medical attention. As he recovers, he grows interested in Celebrimbor's work and suggests a way to create a small object with Elrond's mithril. Míriel and Elendil return to Númenór to learn that Tar-Palantir has died. The Harfoots find the Stranger and attempt to rescue him from the women. The Stranger, receiving encouragement from Nori, uses magic to banish the women to the unseen world. Regaining some of his memories, he explains to Nori that he is a Wizard and needs to travel east to the land of Rhûn. Nori decides to go with him. Galadriel reviews records on the Kings of the Southlands and realizes that Halbrand is not who he says he is. She confronts him and he reveals himself to be Sauron. She refuses to join him and he flees to Mordor. Choosing not to reveal this, Galadriel encourages Celebrimbor to move forward with the plan but make three objects instead. Elrond finds the records and deduces what happened, but too late: three Rings of Power are forged. ("Alloyed")