From a riddle-speaking butterfly, a unicorn learns that she is supposedly the last of her kind, all the others having been herded away by the Red Bull. The unicorn sets out to discover the truth behind the butterfly's words. She is eventually joined on her quest by Schmendrick, a second-rate magician, and Molly Grue, a now middle-aged woman who dreamed all her life of seeing a unicorn. Their journey leads them far from home, all the way to the castle of King Haggard.
A young shepherd, Lucas, is blinded by lightening, and some kindly nuns at a nearby abbey take him in. Sister Catherine describes snow to Lucas, who has never seen it. Lucas gets chosen to play an angel in the abbey's Christmas pageant, and the Christmas snow that falls during the pageant works a small miracle.