The story opens at Caer Dallben where Dallben the enchanter and Coll the farmer and retired warrior have raised the orphan Taran from infancy. It is early autumn more than a year after the defeat of Arawn's army and death of his warlord the Horned King which ended The Book of Three . Taran has returned more or less contentedly to farming and studying under the tutelage of his mentors. However, weightier matters are afoot.
Prince Gwydion has called allies to a council hosted by Dallben. Men are disappearing and more and more of the undead Cauldron-Born have joined the forces of Arawn the Death Lord. Evidently the Black Cauldron is active: Gwydion proposes to capture it. King Morgant of the kingdom of Madoc will lead the main force in an attack on Annuvin after a smaller raiding party led by Gwydion has broken off to enter by a mountain pass known only to Coll. If all goes as planned, Gwydion's party will slip into Arawn's stronghold and steal the Cauldron without being detected. Three men have been designated to remain behind with pack animals to serve as a rearguard and secure the retreat: Adaon, the warrior son of chief bard Taliesin; Taran; and Ellidyr Prince of Pen-Llarcau, who is arrogant, wiry, strong, and threadbare. Ellidyr disdains Taran for his place on the farm and his unknown parentage. Taran envies Ellidyr for his noble birth, despite Dallben's counsel that that youngest son of a minor king has only "his name and his sword". Both are dismayed to share a role with no chance for glory.
Leaving aside the feud between the two youths, all goes smoothly until Gwydion's raiders find that the Cauldron has disappeared. That company rejoins the rearguard in haste because the Huntsmen of Annuvin have been deployed. Meanwhile, the uninvited Princess Eilonwy and man/beast Gurgi have caught up with the quest from behind. Gwydion and Coll are split off from the party but, thanks to Doli of the Fair Folk, all others find refuge underground in a Fair Folk waypost maintained by Gwystyl. From Gwystyl and his pet crow Kaw, they learn that the Cauldron has been stolen by the three witches Orddu, Orwen and Orgoch, who reside in the bleak Marshes of Morva.
When they depart the waypost, Ellidyr rides southward, determined to retrieve the Cauldron single-handedly. With the Huntsmen abroad, Adaon leads the others in pursuit: Taran, Eilonwy, Gurgi, Doli, and the wandering bard Fflewddur Fflam. When they are attacked and scattered, Adaon is mortally wounded and Taran inherits his brooch, whose gift and burden is prophetic dreams and visions. With its guidance, he gathers and leads all but Doli toward the Marshes. From the fringe he both guides his small party through the Marshes to temporary safety and leads a pursuing band of Huntsmen to their deaths.
Orddu and her sisters explain that Arawn once paid them a great price to borrow the Cauldron; they retrieved it only when he held it beyond the agreed-upon time. In their way, they welcome friends of "Little Dallben", but they refuse to give up the Cauldron unless they accept the offer in exchange for something of (in their judgment) equivalent value. Thus, they refuse the offer of Gurgi's wallet with its inexhaustible supply of food, Eilonwy's magical bauble, or Flewddur's falsehood-detecting harp. Having had the offer of his sword and horse refused, Taran is compelled to barter the brooch of Adaon. The companions then try to destroy "their" Cauldron but learn from the witches that can be achieved only by a living person who knowingly and willingly climbs in to die. Horrified, the questors resolve to take the Cauldron to Dallben to seek an alternative solution.
At the ford of the river Tevyn, the heavy and cumbersome Cauldron sinks into the riverbed. Ellidyr arrives and offers to help extricate the Cauldron if the others will credit him for the whole enterprise. Taran agrees, yet Ellidyr rides off with the Cauldron alone when they have freed it. Soon the companions meet the army of Morgant, who welcomes them. Unfortunately, he is a traitor. In Morgant's camp they see Ellidyr beaten and bound, and the Cauldron waiting to generate Morgant's own undead legion. He offers to spare the companions' lives if Taran will enter personal service. Later, Doli arrives invisibly and cuts everyone's bonds. Ellidyr determines to rush the Cauldron and make the sacrifice himself. Although wounded, he is able to force himself into the opening and the Cauldron shatters.
Gwydion, King Smoit, and his army defeat Morgant in battle. The story closes as Taran, Eilonwy, and Gurgi take leave of Gwydion at the verge of Caer Dallben.