The story begins with the player character (PC), under the guidance of Lady Aribeth, sent to recover four creatures (dryad, intellect devourer, yuan-ti, and cockatrice), known collectively as the Waterdhavian creatures, needed to make a cure for the Wailing Death, a plague that is sweeping the city of Neverwinter and forcing a quarantine. With the help of Fenthick Moss, Aribeth’s love interest, and Desther, Fenthick’s friend, the PC is able to retrieve the creatures. As they collect the creatures, they are attacked by mysterious assassins from a cult that is behind the spreading of the plague.
As the cure is being made, Castle Neverwinter is attacked by the minions of Desther, who betrays the heroes. Desther takes the completed cure and escapes the castle, with the PC and Fenthick in pursuit. When they catch up to Desther, he surrenders after a short battle. Desther is sentenced to burn at the stake, and Fenthick, despite being unaware of Desther’s true intentions, is sentenced to hang. The PC meets up with Aribeth, and they begin searching for the cult responsible for the plague and the attack on Neverwinter. With the help of Aarin Gend, Neverwinter's spymaster, the PC retrieves the diaries of dead cultists and letters from a person named Maugrim, which convince Aribeth that the cult's headquarters are in Luskan. Aribeth goes ahead to Luskan, and the PC follows after speaking once more to Gend.
After arriving in Luskan, the PC hears rumors that Aribeth is joining with the cultists. These fears are confirmed when she is found meeting with Maugrim and Morag, Queen of the Old Ones. They seek a group of magical relics called the Words of Power. The PC retrieves all of the Words of Power except for one held by the cult. The PC discovers that the Words open a portal to a pocket world inside the Source Stone, where Morag and the other Old Ones are. The PC confronts Aribeth, and depending on how the meeting is handled, she either surrenders to the PC or they are forced to kill her. The PC battles Maugrim for the final Word, then uses the Words to enter the Source Stone and battle with Morag. After Morag's death, the PC escapes the Stone as the world inside it implodes.