Several weeks have passed since the events of the last book. The satyrs take Seth deep into the woods to find gold they can trade for batteries. The gold they want is kept by the nipsies, the smallest fairy race. However, it turns out the nipsies are at war with each other, with half of them appearing darker, with fangs. Seth relates this information to Kendra, who passes it on to Grandpa Sorenson. He is surprised and upset by this news, as nipsies have no fallen state.

Meanwhile, Kendra is inducted to the Knights of Dawn, and is given a mission to help recover and recharge the secret artifact at the Lost Mesa preserve. She travels there with Warren and Gavin (a young dragon tamer). They are able to navigate the traps, but Kendra discovers a note from Patton Burgess (former caretaker) that he took the artifact and hid it at Fablehaven years ago.

At Fablehaven, the shadow plague has spread to fairies, satyrs and many others. Coulter is bit by a dark fairy and turned to a shadow (which only Seth can see due to his encounter with the Revenant). Seth is also now immune to magical fear, as we learn when he meets with the demon Glaucus and learns that another demon, Kurisock, is somehow responsible for the plague.

Upon returning to Fablehaven, Kendra learns from Lena (the water nymph who had married Patton) that the artifact is hidden in the old, now haunted, manor. With everyone driven out of the house by the infected brownies, they are now hiding out at the pond near the fairy queen's shrine. Seth, Grandpa, Dale, and Warren head off to the old manor to recover the artifact. All but Seth are incapacitated by Ephira's (the floating woman from the first book) magical fear. He is able to recover the artifact (Chronometer) and when he pushes a button Patton Burgess appears. It turns out that the artifact can control time, and Patton pushed a button on it that, when pushed again, would send him to the future for 3 days time.

Back at camp, Patton reveals that Ephira was once a Dryad who became human to marry Patton's Uncle. He left her, though, and Ephira went mad. Kurisock corrupted her, but recently the power of the Revenant's nail allowed her to create this plague. Patton then asks Lena to return the fairy queen's bowl to Kendra, which she does, along with leaving the water to be with Patton again. Kendra approaches the queen again, only to learn that the only way to defeat the plague is for the power of the shrine to be given to Kendra (which destroys the shrine). The stone that is created will destroy the nail and end the plague, but whoever touches it to the nail will die. Shadow Coulter approaches the pond, and Kendra touches him, curing him. He reveals the others have all been imprisoned. Patton, Seth, Lena, Coulter, and Kendra (along with the remaining, uninfected creatures) travel to Kurisock's domain to destroy the nail. A great battle ensues, and in the end it is Lena to touches the stone to the nail, ending the plague, but dying in the process.

Patton returns to his time, but not before learning from a Lieutenant of the Knights of Dawn that when the Sphinx was confronted with the truth of him drying to gather the artifacts, he fled. Everyone concludes the Sphinx must be an enemy after all. Seth and Kendra return home with their parents and Kendra receives a letter from Gavin saying he hopes they can get to know each other better.