Jeff Steward, a psychologist, takes good care of his patients mostly living in the same apartment. One day a piece of the bathroom ceiling collapses so he can watch the woman living in the upper apartment taking a bath. This causes total disorder of his normal life and he starts mixing the patients’ psychoses up with his own.

From a riddle-speaking butterfly, a unicorn learns that she is supposedly the last of her kind, all the others having been herded away by the Red Bull. The unicorn sets out to discover the truth behind the butterfly’s words. She is eventually joined on her quest by Schmendrick, a second-rate magician, and Molly Grue, a now middle-aged woman who dreamed all her life of seeing a unicorn. Their journey leads them far from home, all the way to the castle of King Haggard.

When a town learns that Santa Claus has struck it off his delivery schedule due to an insulting letter, a way must be found to change his mind.