Some time later the unicorn meets a butterfly and as butterflies are known for their travel she asks him if she is indeed the last. After much nonsense and riddles the Butterfly tells the unicorn a story of a flaming bull that chased all the unicorns to a far away land. The unicorn then decides she must seek the other unicorns and the truth out by leaving the safety of her forest.

Along the way the unicorn falls asleep and his captured by a witch named Mommy Fortuna and her hunch back goon Ruhk and put into a traveling sideshow of magical creatures. A magician named Schmendrick who travels with the carnival sees that while all but one of Fortuna’s other creatures are illusions the unicorn is real and sets her free. Schmendrick also frees the side shows only other authentic creature, the Harpy who kills both Fortuna and her hunch back. Schmendrick then joins the unicorn on her quest and attempts to lead her to King Haggard’s castle, who he hears controls the Red Bull.

On the road to the castle Schmendrick is captured by a band of thieves and the unicorn must save him. While doing so she attracts the attention of the king of the thieves' wife, Molly Grue. Molly who has always sought to find a unicorn as many young maidens do, joins their quest.

The three continue on their way entering a town under King Haggard’s rule. A villager named Drinn tells them of the evil of King Haggard and of a young baby he adopted that was prophesied to bring the king from his throne and free the land of his tyranny.

Back on the road again the trio finally encounters the fabled Red Bull and he attempts to herd the last unicorn to the others. In an attempt to save her Schmendrick performs a spell which turns her into a human girl. This fools the Red Bull at the time, and allows the party to enter Haggard’s castle under the guise of a simple court magician, a cook and the Lady Amalthea who is the last unicorn.

King Haggard’s son Lir who is later discovered to be the boy the villager Drinn spoke of falls in love with Lady Amalthea and in time she falls for him as well. The unicorn begins to forget her past and who she is even after King Haggard reveals he has herded all the unicorns into the sea because they are all that makes him happy.

Soon King Haggard begins to suspect and even accuses Lady Amalthea of being the last unicorn. However with the help of a cat’s clues they find the entrance to the Red Bull’s lair and accompanied by Lir set out to save the unicorns.

When they meet the Red Bull they are attacked and Schmendrick manages to turn Amalthea back into a unicorn feeling this is the only way she can defeat him. Lir attempts to save her from the Red Bull and is killed. In rage and sorrow brought on by the death of her love the unicorn drives the Red Bull into the sea freeing the unicorns of the world , destroying King Haggard’s castle with him within it, and killing the Red Bull.

The last unicorn revives Lir using the power of her horn but remembering her forest and what she truly is runs away. Lir tries to follow her at first and discovers that Drinn from the village is really his [[father] and that he has now fulfilled his destiny but he must rule as King over the land. Schmendrick and Molly go on the adventure together and Lir returns to restore the land to prosperity.