Three children, Mary Green and her cousins William and Alice Constant, arrive with her Uncle Jack at Mary's father's home, Golden House, in the forests of Wales' Golden Valley, to spend their Christmas holidays. Once there they meet a 400-year-old magician who has been waiting for their help.

The evil Morden, the magician's former apprentice, sends a talking rat from the year 1590 to the present. Not only does this upset the balance of time, but the rat persuades Mary that her pregnant stepmother Phoebe is a witch who has cast a spell over her father. Meanwhile, William and Alice try to befriend Meg Lewis, an elderly animal activist, who warns the children about the valley's evil badger hunters.

Still under Morden's rat's influence, Mary hides her stepmother Phoebe's protective talisman and arranges for her to have an accident. Alice suspects that Mary is subverting their efforts to find the rat. Meg Lewis worries that badger hunters plan to dig out and torture the valley's rare golden badgers.

Trapped in the cellar by Morden's rat, Phoebe goes into labor during a blinding snowstorm. Going for help, William receives assistance from the valley's magical animals.

Morden manages to project his consciousness from the year 1590 into the present, and Mary discovers the truth about her rat friend as Morden inhabits the creature and starts to assemble an army of rat followers to attack Golden House.

Alice seeks comfort from Spot the dog, unaware that he is now inhabited by Morden. The children race to an abandoned quarry, where Tyler the Magician has challenged his evil apprentice Morden to a final battle.