A tale of a little princess growing up in a country house/castle -- kept carefully inside for the danger of the goblins who live in the mountains.
On one rainy day, Princess Irene wanders in the house, gets lost, finds a woman spinning in the tower, unbeknownst to anyone inside -- her great-great-grandmother Irene. On the first clear day after that storm, she goes walking with her nurse-- too far -- and can not return before nightfall, when the goblins start to menace them. Fortunately, they meet Curdie, a young miner, who knows the trick of seeing them off, and gets them home safely. Irene promises to kiss him, but the nurse interferes, much to her distress, and Curdie gallantly points out to her that she had not promised to do it then -- she could do it later without breaking her word.
The story this leads to involves Irene thinking her great-great-grandmother a dream, a visit from her father the king, a goblin creature like a cat with enormously long legs, Curdie's overhearing something in the mine, the goblin king's first wife, a ball of thread so fine that it's invisible, and much more.