The dark sorceress Nimueh casts a spell on a dragon egg she throws into the castle's water. The next day a plague causes people to die, their skin turning white with dark blue veins. When King Uther orders Prince Arthur to search all Camelot for the sorcerer he believes to have caused the epidemic, only a magic trick saves Merlin from having his book found. When Gwen's father exhibits symptoms, Merlin waves Gaius's warning by curing him. Arthur reports the recovery, and Uther orders her execution at the stake. Merlin tells Gwen's caring mistress, Morgana, only Arthur can help him fight the monster (an afanc), which they search for in the dragon's cave.

Gwen's blacksmith father Tom is approached by Tauren, who possesses the alchemist's stone and wants Tom's help in turning base metal into gold - gold he intends using to overthrow the king. The palace guards raid the smithy; Tauren escapes but Tom is caught, sentenced to death for assisting sorcery and (unsuccessfully helped to escape by Morgana ) killed. Appalled by Uther's callousness, she tells Tauren she will help him in his plot, unaware that Merlin is listening. On the pretext of visiting the grave of her father, for whose death she blames Uther, she rides out with the king to lead him into Tauren's trap.