Plot
The leprechaun Barney Kilakilarney narrates the story of cabin boy Dinty Doyle, who works on the ship Belle of Erin during its voyage to Dublin. Dinty is assigned to travel to a nearby island and procure a tree for Christmas Eve. He is observed by a family of leprechauns, who have not seen a human in two centuries. Before the leprechauns can stop him, Dinty digs up a tree that had imprisoned the banshee Old Mag.
Old Mag summons a storm after being freed. When the storm passes, a rainbow appears that leads Dinty to a clover patch containing the leprechaun's gold. Dinty encounters Barney Kilakilarney, who initially takes Dinty for a thief before he explains himself.
As the two wait for their tea to cool, Barney tells Dinty of the two clans of leprechauns, the gold-mining Kilakilarneys and shoe-making O'Clogjiggers. Barney and his wife Faye O'Clogjigger lived for centuries happily married. Old Mag attempted to take the leprechauns' gold to sustain herself, as she will wither into teardrops without it. When Barney refused to give Old Mag his gold, she caused an earthquake that broke off the leprechauns' stretch of land into the phantom isle of Thule. Barney enlisted the aid of Saint Patrick, who managed to imprison her in a pine tree.
Old Mag secretly mixes Barney's tea with a potion that will make him willingly give her the gold. Barney attempts to resist the potion's effects, but is unable to do so. Instead of giving the gold to Old Mag, Barney gives his gold to Dinty and makes him promise to protect it.
Dinty returns to the beach, only to find that the storm swept his boat away. He investigates the sound of crying and finds a woman named Colleen stranded on the beach who claims to have survived a shipwreck. Colleen suggests giving the gold to her so she can have the leprechauns build a ship for passage back to Ireland and share the remainder among the people of Killarney. Swayed by the fantasy, Dinty gives the gold to Colleen, who reveals herself to be Old Mag. Dinty attempts to revoke the deal, but Old Mag places a curse on him that will make him sleep for one hundred years.
Later on the beach, Barney and his estranged family mourn Dinty. Faye apologizes to Barney for being headstrong in her disbelief of Old Mag's tricks, while Barney apologizes for putting gold ahead of his love for her, and the two reconcile. At that moment, Saint Patrick looks down approvingly from the sky and a rainbow appears. Dinty awakens from his cursed slumber, stating that the light of love freed him from the curse. Old Mag follows the rainbow to Barney's stash of gold, only to be touched by the morning sunlight. She turns into tears and is washed away by a deluge. The Belle of Erin arrives to retrieve Dinty, who prepares to take the leprechauns with him so they can return to Ireland.
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