Janner Igiby and his family have lived on the edge of the town of Glipwood, in the land of Skree, for as long as he can remember. His life has settled into a simple routine: helping his grandfather with the farm, taking care of his younger siblings, Tink and Leeli, and working for Oskar N. Reteep at the bookstore in town. As Dragon Day approaches and tourists come to watch the majestic sea dragons sing, Janner desperately wishes for adventure.
Janner’s grandfather Podo, sensing his restlessness and thinking some freedom and responsibility would be good for Janner, allows him to take Leeli and Tink to the festival unaccompanied. While at the festival, Leeli gets separated from Tink and Janner after chasing her dog, Nugget, into the crowd. Leeli has a crippled leg and is only 9, so Janner and Tink worriedly begin searching for her.
Several years before, Skree had been conquered by a nameless evil called Gnag. Gnag the Nameless sent a vicious army of Fangs, tall lizard-like humanoids, to occupy Skree and oppress the population. Leeli’s dog trips Slarb, one of the Fangs, and he intends to kill Nugget. A desperate Leeli kicks Slarb in the shin, and he attacks her as well. Two other Fangs join the fight.
Janner and Tink find Leeli and attempt to overcome the Fangs. The battle is not going well for the three children, but suddenly three rocks that seem to come from nowhere knock the Fangs unconscious. Janner is aware of the consequences of attacking Fangs, and so he, along with with Leeli and Tink, immediately find Podo and their mother, Nia.
Before the children can locate their guardians, however, they are captured and thrown in jail. The Fangs intend to send them in the Black Carriage to the Gnag’s Skreean headquarters at Fort Lamendron. No one who goes into the Black Carriage ever returns. Nia and Podo finally discover what has happened, and Nia bribes the Fang Commander Gnorm with jewels and a promise to bring him homemade maggotloaf once a week. He releases the children to the immense displeasure of Slarb.
The next day, Janner and Tink cautiously return to town to help Oskar unpack a new shipment of books. Tink finds a treasure map marked with a dragon emblem and the words “The Jewels of Anniera.” The map contains a stern warning against reading it, so when Tink hears Oskar coming, he stuffs it up his sleeve and carries it home with him.
Tink convinces Janner to follow the map, and they end up at an abandoned estate called Anklejelly Manor. Horned hounds chase Tink and Janner, and while the boys are trying to escape, they find an old cellar room full of weapons. The boys are surprised since the Fangs confiscated all of the Skreeans’ weapons years ago. Eventually the horned hounds leave, and Janner and Tink are able to leave the cellar and return home.
Meanwhile, Commander Gnorm must travel to Fort Lamendron to report to his commanding officer, General Khrak. Gnorm hides most of Nia’s jewels before meeting with Khrak, but forgets about one medallion. Khrak steals the medallion from Gnorm. In the meeting with Khrak, Gnorm discovers that Gnag is renewing his search for the Jewels of Anniera. Gnag fears these jewels have a hidden power that could lead to him eventually being overthrown.
Back in Glipwood, Janner and Tink return to Mr. Reteep’s bookstore, bringing Leeli with them. Janner leaves Leeli with Oskar and goes to return the map Tink accidentally stole. When Janner returns, Leeli is gone. Janner panics. Oskar says she just stepped outside to check on Nugget, but she’s not there. Oskar’s friend and assistant, Zouzab, spies Slarb carrying Leeli away into the woods. Janner and Tink run home to get Podo, who leaves to save her.
Leeli attempts to run away but is unable to escape due to her crippled leg. As Slarb is about attack her, Peet the Sock Man, whom all of Glipwood believes to be crazy, knocks Slarb unconscious. Peet picks up Leeli and carries her deep into Glipwood forest to the tree house where he lives. Podo finds her there and brings her home safely.
Khrak becomes bored while listening to a subordinate’s report and begins to examine the medallion he received from Gnorm. He suddenly notices a dragon symbol: the seal of Anniera. Khrak believes whoever had the medallion before Gnorm would know the location of the Jewels of Anniera. He sends a message to Gnorm, and Gnorm and his soldiers arrest the Igibys, stabbing Nugget and leaving him to die. Gnorm offers to release the Igibys if they give him the jewels. Podo and Nia refuse. The Igibys attempt to escape while they are being loaded into the Black Carriage but are quickly subdued. Peet suddenly appears and, with the help of Podo and Janner, kills all of the Fangs. He takes Nugget to try and heal her.
The townsfolk begin evacuating, knowing that Khrak will send reinforcements and probably destroy Glipwood. When Gnorm’s company fails to arrive, the townsfolk calculate that they probably have until morning to escape. Podo, Janner and Tink go to their house to gather supplies, leaving Leeli and Nia with Oskar.
When they return for Leeli and Nia, the Fangs from Lamendron have already arrived. A severely injured Oskar explains that Zouzab betrayed them all and signaled Lamendron as soon as the first company of Fangs was killed. Podo, Janner and Tink attempt to rescue Leeli and Nia but are almost defeated before Peet appears riding Nugget, who is now the size of a horse.
The Igibys escape, but the Fangs pursue them. The Igibys, Peet and Nugget find themselves at Anklejelly Manor. The Igibys barricade themselves in the cellar that holds the weapons, while Peet and Nugget continue to fight. Podo and Janner leave and fight their way into a different cellar and light a large fire, hoping to attract deadly forest beasts to attack the Fangs. They return to the weapons room, but Podo is injured. Peet and Nugget finally flee. Toothy cows, horned hounds and the other beasts attracted by the fire finish off the Fangs.
Nia begs Peet to heal Podo like he healed Nugget. Peet explains that he has water from the First Well, which has healing properties. After Podo recovers, the family accompanies Peet to his tree house to rest before fleeing to the Ice Prairies.
Janner, frustrated by Podo and Nia’s refusal to give Gnorm the jewels, demands answers. Nia explains that Janner’s dead father was the High King of Anniera and that Janner and his siblings are, in fact, the jewels. Janner is the Throne Warden, whose job is to protect the king; Tink is the King of Anniera; and Leeli is a Song Maiden. The Igibys then rest and prepare for their journey.