The story begins as the unseen Narrator tells a story to an unknown group of travelers from the sea, going first to Kusteburg, and then to Pilzstadt where the Narrator advises his audience that the tale starts.
Siegfried Sommer, adventuresome young musician, is summoned to The Shaggy Mane Inn by the mayor of Pilzstadt, whom he finds in conference with Mr. Wolf, the master of markets and commissioner of Shroomspringa. The two officials explain that a royal envoy from a distant kingdom is to arrive in Pilzstadt, with an eye towards purchasing some of the imperishable cedar wood from the ancient dead-fall "Ruddy Hans". They hope to welcome him with music from the envoy's homeland, with which Siegfried is not familiar, so the young musician is sent to accompany Mr. Wolf to Kusteburg where a traveling minstrel familiar with the foreign songs can teach them to Siegfried.
Meanwhile Evonni Kruger, the reclusive hunter, searches the Forest of Eisenwald on an errand for Mr. Wolf. Her keen eyes spot the object of her hunt — an as yet unrevealed object — and with this mysterious item secured she makes her way to the river to wait for Wolf's arrival as instructed.
Later, the eager but troubled young Ugo Dunkelauge is on the fringes of Pilzstadt where he spots and avoids a pair of local bullies, whom he shortly thereafter witnesses absconding with something from the inn, and then making a quick escape. Ugo was also summoned to meet with Wolf at the inn, and so he makes his way there. Upon his arrival, Mr. Wolf informs him that his family has been formally accepted into the village, and furthermore that Mr. Wolf has commissioned him to go on Shroomspringa. (It appears from the mayor's reactions that Wolf has somehow pressured or cajoled her into agreeing to these actions against her own wishes.) Ugo is at first stunned, and then nearly panicked when he is told that he must leave immediately, and is given scrip by Wolf to outfit himself at the general store.
Ugo, having assembled a bindle of supplies from the general store, heads to the dock where he meets Siegfried. Together, they board the barge and Ugo almost falls into the water as he tries to copy Siegfried's casual hop from dock to deck, but Siegfried catches him with a swift Acrobatic maneuver and pulls him aboard, where Wolf shortly joins them and the barge sets off downriver.
Elsewhere, the enigmatic wanderer Coge Fenter finds his way to Kusteburg, where he attempts to find work but has difficulty explaining the nature of his talents to the townsfolk. It is there where he encounters a Mysterious Woman, who seems to sense potential in him, and offers him an opportunity.
Back on the barge, Ugo discusses Shroomspringa with Siegfried, the latter having already completed his. Before long, the barge crew slows the vessel at Wolf's behest and briefly steer towards the bank, where Evonni is waiting and hops aboard without a word. The two young men try to engage her conversation, but she is reserved and the company soon lapses into an awkward silence, broken only when Siegfried decides to play his hornpipe to the delight of the barge crew.
The barge group arrives in Kusteburg, and after leaving the harbor there they encounter The Mysterious Woman, whom Wolf seems to know and be slightly discomfited by. (Leading Ugo to suspect her of being Wolf's "special lady friend".) After parting ways, Wolf takes the group to The Dukes Rest, a nicer inn past the harbor, and leaves them in the care of Herr Hill the innkeeper. Siegfried, always eager to spread his fame in Kusteburg seeks to ply his trade but discovers a pair of minstrels already playing there, much to his chagrin.
In the back room, Wolf meets with and hires the perplexed Coge. Coge accepts Mr. Wolf's offer and they toast with a liquid poured out of a Flask before Mr. Wolf sends him out to meet his new compatriots in the common room while Wolf attends to another matter. After introductions, during which Siegfried unsuccessfully tries to nail down what exactly it is that Coge does, dinner is served. As they eat, Siegfried brings up the subject of his favorite tavern game: darts. Herr Hill happens to have an old dart board in the basement made from a crosscut log, which he dusts off and hangs up in the common room for his guests. They each take turns, with Ugo narrowly hitting the board, Siegfried striking near the center with one of his own hand-fletched darts, and Coge employing a strange throwing technique to get a bullseye. Evonni then misses badly with a wild throw that ricochets improbably around the common room, before hurling one of her daggers at the board in frustration instead and hitting the bullseye dead-on. Thereafter she declared the game to be stupid, and retrieved her dagger from the board, leaving an immense gouge where the bullseye had been. Siegfried wryly congratulated her on having "slain the dartboard."