The goblin Blacknail, fresh from his cage, is claimed by the grizzled scout Saeter who sees potential in the creature's nose and discipline. Through a series of harsh but fair tests, Blacknail proves his worth, learning commands and earning his first loincloth. He is introduced to the bandit camp's hierarchy, meeting the intimidating chieftain Herad, the muscular Vorscha, and the bookish Geralhd, all while navigating the terrifying dangers of the forest including wolves, harpies, and timber spiders. The goblin's cowardice and cunning are put to the test as he learns to survive, culminating in a drunken night that leaves him with a pounding hangover and a new sense of belonging.

The bandits face a ghoul infestation that infiltrates their camp, killing and infecting several members. Blacknail's keen nose proves invaluable as he sniffs out the infected, saving lives and earning Herad's grudging respect. The ghouls are purged with silver and fire, but the victory is bittersweet as the camp's population is drastically reduced. Later, Blacknail undergoes a startling transformation into a hobgoblin, growing horns and a more aggressive temperament. This new nature threatens his place in the band, but after a brutal training regimen with Saeter that includes sword drills and discipline, he learns to control his rage and earns a sword of his own.

Saeter, Blacknail, and a party of bandits are sent to hunt a troll that has been terrorizing the area. The hunt is fraught with danger, including a terrifying encounter with the massive beast that nearly kills Saeter. Blacknail's quick thinking and a desperate plan involving a mage's magic and a trapped goblin named Scamp lead to the troll's explosive demise. In the aftermath, the bandits return to camp to find a new prisoner, a paladin named Sir Masnin, who was tracking the ghouls. The paladin's presence creates tension, but a sudden attack by a giant serpent forces an uneasy alliance between the bandits and the holy knight.

A massive, mentally-dominating serpent attacks the camp, turning the battle against the knights into a chaotic three-way conflict. Blacknail's earlier discovery of the creature's invisible presence is key to exposing it. The hobgoblin then devises a plan to use the goblin Scamp, who can magically trigger flawed crystals, as a living bomb. Scamp is thrown at the serpent, the crystals detonate, and the beast is obliterated. In the aftermath, Blacknail confronts the paladin Sir Masnin, issuing a chilling threat that he will hunt down and kill the man's loved ones if he ever returns to harm the tribe. The paladin leaves, and Herad announces her plans to expand her territory and march on Daggerpoint.