The opening phrase, "There once was a Princess," places the action in a distant land, in the distant past. The country is ruled by a king and there are few signs of technology. The action takes place in and around (and even under) one of the king's great houses, which is situated halfway up the side of a mountain. In the lower regions of the great house live the princess, Irene, her nurse, Lootie, and the other servants. One day while exploring an apparently unoc cupied region of the house, Irene discovers a mysterious woman known as Grandmother, whose guidance and supernatural powers help Irene through her subsequent adventures. Irene is also assisted by Curdie, the son of a miner, who lives with his father and mother in a humble cottage farther up the mountain.

Underneath the mountain, in a subterranean kingdom, live the goblins.

They moved there...