The four Pevensie children are waiting at a train station when a magical force pulls them into Narnia. They land at an overgrown castle which they recognise as Cair Paravel, and recover the gifts which they had received on their first adventure in Narnia.

Lucy wakes up from sleep, hearing someone calling her name. She realises that it is Aslan, who instructs the others to follow him. The children meet Aslan the next morning at the Stone Table (or Aslan’s How, as it is now known following the creation of a mound concealing the table), and he takes them to meet the Old Narnians and Prince Caspian.

On board the ship the Dawn Treader, Edmund and Lucy are reunited with Caspian who has grown into a young man since they last saw him. He explains that he is on a quest to find seven lords who were friends of his late father, having been banished from Narnia by the wicked King Miraz.

They later find an isolated island which appears to be uninhabited. Eustace wanders off and finds a cave where a dragon has died. The cave is full of gold and jewellery, and Eustace finds a bracelet which he puts on. He is tired and soon falls asleep, but when he wakes up he soon realises that he has been transformed into a dragon. He flies back to the beach where the others confront him, and they soon figure out who he is. He is soon turned back into a human by Aslan. Caspian establishes that the bracelet was a possession of Lord Octesian, who must have perished on that island.

The third island (Caspian declares it "Goldwater Island," but Reepicheep proposes the more apt name of "Deathwater Island") where they find a cavern in which there is a pool. Edmund places his sword in the water to measure its depth, only for it to become heavy and fall in the water – causing it to splash over his shoes and produce splashes of gold. There is a body in the water, and they establish that anyone or anything that ends up in the water turns into gold. Caspian later realises that the body in the water is that of Lord Restimar.

The fifth and final island is at the end of the world. Before they ascend the island, they find a man in the water who introduced himself as Lord Rhoop. On the island they meet Ramandu and his daughter, and also find the three remaining Lords who are in an enchanted sleep.