The Ohmsford family of Shady Vale is surprised by a half-elven baby left on their doorstep. The baby is taken in and named Shea. He is raised like a brother to the Ohmsford's son, Flick. The brothers become inseparable, helping run the family inn, until nearly twenty years later, when a tall, dark, mysterious figure arrives in the Vale. His name is Allanon, last of the Druids. His face is perpetually in shadow under the dark folds of his robe. Allanon comes with a warning: Shea's life is in danger. He claims the Warlock Lord, now thought to be a myth, has returned, and is after Shea, the last descendant of Jerle Shannara and the only one now living who can wield the Sword of Shannara against him.
Giving Shea three blue stones for protection, Allanon departs, bidding Shea to leave the Vale immediately. Reluctant to heed Allanon's advice, it takes the visit of Skull Bearers, powerful minions of the Warlock Lord, come to the Vale in search of the last descendant of Shannara to persuade Shea to leave. Shea and Flick flee with the Skull Bearers on their heels. They seek refuge in the nearby city of Leah. Shea is friends with Menion, the lazy son of the city's lord. Menion guides them to the Eastland, where they are to meet Allanon at the Dwarf capital of Culhaven.
The three blue Elfstones (as they are revealed to be) protect Shea and his companions through their adventures until they safely arrive at Culhaven. Once there, a council of the Races is summoned under Allanon to decide how to combat the Warlock Lord. It is decided to send a small party to Paranor, the final resting place of the Sword of Shannara. There they could take possession of the one weapon that could destroy the Warlock Lord, once and for all. Journeying through the Valley of Shale, where the spirit of Bremen resides, and under the Dragon's Teeth mountains, they finally arrive in Paranor, but Shea is lost along the way.
The remaining group finds Paranor overrun with Gnome soldiers in the service of the Warlock Lord, and the Sword missing; it has already been taken north to the Skull kingdom. The group splits up, some to find Shea, others to prepare for the inevitable battle that will ensue.
Flick sneaks into the enemy camp and rescues the captive Eventine Elessidil, King of the Elves, thus mobilizing the Elves to the aid of Callahorn, the Borderland country that would be struck first. Menion saves a beautiful redhead named Shirl Ravenlock, with whom he falls in love, and together they organize evacuation of the island city of Kern which is later burnt by Northland army. Meawhile, Shea's life is saved by a one-handed thief named Panamon Creel and his mute Troll companion, Keltset. Journeying to the Northland, Shea and his rescuers reach the Skull kingdom itself, where an insane Gnome deserter has carried the Sword of Shannara in his madness.
Just as the battle to the Borderlands is about to be lost to the northern army, Shea takes the sword, his birthright. Its enigmatic power is finally revealed to him, as he is confronted with the truth of his life the moment he touches the handle. Just then, the Warlock Lord materializes to destroy Shea. In a rage of determination to never let Brona hurt anyone else, Shea attacks. The Warlock Lord, immune to physical weapons, is struck down by the truth of himself. Brona, the man, died in the First War of the Races. The rest of his life was a lie. Forced to confront the truth of his death, the Warlock Lord, and all that he had ever done, vanishes.
The destruction of the Skull kingdom takes Keltset's life as he sacrifices himself to save his friends. In the south, the Troll army is easily dispatched once the Skull Bearers follow Brona to his fate. Allanon saves Shea's life, reveals that he is the centuries-old son of Bremen, and soon disappears, saying he needs to sleep... Peace returns, and the heroes go home. Shea and Flick are reunited, having found their confidence, and Menion has become a responsible young man, with a Borderland girl to return to.
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