Tamsin Weston unwittingly releases the evil spirit of the Dark Stallion, who has been trapped inside a small statue for hundreds of years. Her mistake threatens to bring perpetual storms and danger. Only Tamsin can put things right and bring balance back to nature. To do this she must find and enlist the spirit of the Blue Horse, a force for good, who has battled and overcome the Dark Stallion once before.

Tamzin Weston and her new friend Marga are preparing for the pony Fun Day. But there's something suspicious about Marga and her pony Lossie. First Marga takes Tamzin's protective blue talisman and then she schemes so that Tamzin has to ride Lossie in the parade.

When Tamzin goes to stay with her grandmother in Cornwall, she is drawn towards a small grey statue of a grey horse, kept in a cabinet for safe-keeping. One day she accidentally drops the statue and unwittingly releases the evil spirit of the Grey Horse that has been trapped inside. Her mistake threatens to bring storms and danger, and it is only Tamzin who can put things right. To do this she needs the help of the benevolent spirit of the Blue Horse who, according to the ancient legend, defeated the Grey Horse once before. In this third adventure, a newcomer arrives and with his help Tamzin is nearer to solving the mystery behind the ancient legend. But the Grey Horse's power is growing even stronger, putting not only her life in danger but that of the whole village. Hoewever Tamzin is almost sure that the spirit of the Blue Horse is nearby when her favourite pony Moonlight comes to her rescue once again.

Tamzin is trying hard to come to terms with the loss of Moonlight, whom she now knows is the Blue Horse, the kind spirit who is trying to protect her. Although the evil spirit of the Grey Horse has been quiet for some time, Tamzin is inexplicably drawn towards a rocky outcrop just off the coast and goes out in a little boat to investigate. Soon she realises it is a trap and the Grey Horse has succeeded in capturing her in his den. Her blue talisman isn't powerful enough to summon up the Blue Horse, until she spots a small fragment of blue glass - the missing piece of her bracelet. The Blue Horse and the Grey Horse face each other for the final time while Tamzin tries desperately to escape. With the help of the Blue Horse, her friends and her Nan, Tamzin reaches safety and the spirit of the Grey Horse is recaptured forever. And much to everyone's surprise and delight, Moonlight returns, a pony once more.