The setting of the film is a high fantasy Dark Ages Europe, in which desperate and bloodthirsty warlords fight brutal battles in their eternal quest for overlordship. Yet their swords, shields, lances, spears and arrows are all brittle, prone to wear and tear, and dull, protracting their campaigns against each other without end. Word spreads of a man in one of the Northern tribes: an adept blacksmith capable of crafting far hardier, stronger, sharper, and more durable weapons than any other known to exist, with aid of a mystical element. The warlords search for the enigmatic master of weapons to no avail.
A former druid chieftain named Zhadoba, jaded by years of warfare and believing the Radiant Gods have abandoned him, learns of the identity and whereabouts of the blacksmith and his coveted weapons, more valuable than any gold in such a time. With this knowledge, Zhadoba's heart is hardened to mercy and replaced with greed and bloodlust. Bringing even the feared warlord, the Man-Eater, under his spell, Zhadoba massacres an entire people, the Clan of the Grey Hounds, including their blacksmith, and takes his legendary weapons. The only survivor of the tribe, the blacksmith's fair-haired son, witnesses the slaughter and bites at Zhadoba's tattooed hand. Instead of killing the boy, Zhadoba orders the boy to be sent into the savage mines of the Crystal Mountains and to live a life of hard labor there, in conditions which will no doubt kill the boy anyway.
Against all odds, the boy cheats death through sheer determination and will, his strength becomes powerful through many years of hard labor, scarred by violence, and his prowess honed by a hunger for revenge. For many years his only companions were disheartened, tortured slaves and a strangely intelligent bat, Ragged Wing, who is destined to become his constant companion. After killing his overseers with weapons created using his father's secret techniques and escaping the mines, he becomes a wanderer known as Wolfhound: a great and fearless warrior, as well as a true master of weapons like his father before him.
After making the long journey to the Man-Eater’s castle, Wolfhound finally conquers his archenemy. He also frees two prisoners, the sage and healer Tilorn and slave-girl Niilit. Wolfhound accompanies them to their home city of Galirad, which has been thrown into turmoil. The power-crazed forces under Zhadoba are poised to attack the city with their superior weapons at any moment. With enough bloodshed, and the right ritual involving royal blood, Zhadoba believes he can resurrect the ancient Dark Goddess Morana from the Celestial Gates and draw power from her. The King of Galirad, to save the city from destruction, is giving his daughter away in marriage to Vinitar, a young warrior-prince who promises to protect Galirad - and who also happens to be the son of the late warlord, the Man-Eater. Princess Elen must travel to the land of her husband-to-be, and asks Wolfhound to be her guard in this dangerous journey. Wolfhound agrees to serve the princess and is caught up in a whirlwind of mysterious events, as the true purpose of the journey is gradually revealed, a secret which could plunge the world into an eternal living nightmare.
