The film opens with Arthur Spiderwick (David Strathairn) walking hurriedly into his study. The room is shelved with bugs and odd creatures in jars. He begins to frantically put together a book, and when he binds it and stamps his mark onto the cover, a strange beastly sound is heard outside, creatures of all sorts groaning.80 years later: The Grace Family: twins Jared (Freddie Highmore) Simon (Freddie Highmore) Mallory (Sarah Bolger) and their mom, Helen (Mary Louise Parker) have recently moved from NYC to the Spiderwick estate, because of the recent divorce of the parents. While Simon, Mallory, and Helen are excited, Jared hates the move, and refuses to talk to anyone. Inside, Helen and Simon hear footsteps, but see no one in the dark. While they turn the lights on, Mallory and Jared get into a fight, as Mallory (who takes fencing) whips Jared with her sword. She wants the move to work, even if Jared doesn't. Jared is left alone later outside, and hurriedly runs inside when he hears sounds in the bushes.In the boys' bedroom, Jared assures Simon that their dad is coming for them. There is salt all over the window sills, and there is a picture of Aunt Lucinda (Arthur's daughter) as a little girl. She was taken to an asylum when she claimed her father was kidnapped by fairies. Lucinda was the last one to live in the house before she was taken.At dinner, mom finds the kitchen packed with honey and tomato sauce. Mallory can't find her fencing award medal, and mom can't find her car keys. After a brief argument among the siblings, Helen claims that this is not how the family will work. Mallory and Simon get up from the table, and mom receives a call from her ex-husband (Andrew McCarthy). Jared is overjoyed by the call, and dad promises to pick up Jared soon. After hanging up, Jared accuses Helen of not allowing dad to see them. He then hears sounds in the wall, and begins to poke holes in the wall with a broom. His mom thinks he is simply having anger issues again, but Jared claims he isn't. Mallory and Simon appear, and hear the sounds as well. Mallory hits the wall hard with the broom, and an entire section of the wall collapses. This reveals a dumbwaiter, with a lot of items all over. Two of them are Mallory's medal and mom's keys. Mallory accuses Jared of stealing them, and leaves with Simon. Jared uses the dumbwaiter to haul himself up to the attic: a study.Jared finds odd pictures and books in the study, and opens a chest to find a bound leather book. It is titled: "Arthur Spiderwick's Field Guide to the Fantastical World Around You." After finding the book, Jared hears sounds and sees something written in the dust: "Jared Grace, leave this place." Jared quickly retreats downstairs, and realizes everyone is asleep. He wakes Simon up for the cool news, but his twin brother doesn't seem to care. Jared begins to read the book in bed, first ignoring a note that commands Jared not to read the book. As Jared tears off the binding, he hears roars of spiritual entities outside. He climbs inside a footlocker, and reads in there (with flashlight). A montage shows Arthur Spiderwick revealing his life of putting together a book of all the unseen invisible creatures around us. He reveals how some are kind, but some want to simply obliterate all things, such as the evil ogre, Mulgarath. He is shown to be a shapeshifter. In the montage, we watch an evil raven fly towards Arthur, and we hear a raven's cry.....in the house.Jared stops reading, and climbs out of the foot locker to hear a blood currling scream echoing through the house. It is Mallory. In her room, her long hair has been tied to the bedpost, and she yells at Jared for doing so. Jared yells back, saying he didn't do it. No one (except Simon) believes him.The next day, Mallory is practicing fencing with Simon in the yard. Jared comes out to ask Simon what "appease" means, and Mallory yells at him again for tying her hair. As Jared stands in the yard, reading the Guide, he senses something crashing into an invisible wall, towards him. Later, Jared makes a new nest for the brownie of the house, a creature in the book. The brownie's nest was behind the wall, but destroyed when Mallory wrecked it. Jared lures the creature in with honey and crackers, and falls asleep. He wakes to find the honey and crackers missing, and discovers the small creature, an elf face, small clothes, and pointy ears. This is Thimbletack (Martin Short) who runs away when discovered. Thimbletack eventually reveals himself, and begins to turn sour when he realizes the Guide was opened by Jared. He turns into a fat green bogart, and hurls stuff at Jared. Jared calms him down with honey. Thimbletack explains how Arthur wanted the book safe forever, and then Jared sees Simon in the yard, looking for his cat. Suddenly, Simon is grabbed by invisible beings, and dragged away. Thimbletack gives Jared the seeing stone, so he can see invisible creatures. Jared sees short, menacing goblins carrying Simon away.Jared runs into the forest, looking for Simon. He finds a campfire, with hanging cages built around it. In one cage, he finds Hogsqueal (Seth Rogen), a pig like creature who gives Jared the "sight" (by spitting into his eys) so he can see the creatures without the stone. Jared wants to free Simon above all, and Hogsqueal runs away. Simon, however, is brought into the campfire, where an old man interrogates him. He asks Simon if he or anyone he knows has the Field Guide. Simon says he knows who, and goes back to the house to get it. Jared confronts him on the way, and the two fight. Jared saw that the old man turned into Mulgarath, and that they will all be killed anyway. As they fight, Red Cap (Nick Nolte) the general of the goblins, sees the book and lunges for it. The twins run away, back to the house. Jared and Simon retreat inside a protective circle (mushrooms surrounding the house) and warn Mallory (outside the circle) to come in. She doesn't listen, and is attacked by goblins. She sees green blood on her sword, and Jared gives her the seeing stone so she can see the goblins. After slicing up some more, she is pulled by the brothers into the house.The house is now surrounded by goblins, and mom is at work, so she can't help the situation. After tending to some bite marks on Simon's leg, Mallory and Jared argue about what to do (Mallory meets Thimbletack at this time, rather humorously). Simon comes up with a plan, that the two should visit Lucinda at the asylum, since she was telling the truth. Thimbletack persuades Jared to keep the book inside the house, and Jared and Mallory take a shortcut through the backyard and into the sewer, while Simon distracts the goblins at the front. However, Red Cap sees the two making off, and chases them. The two reach the sewer just in time, and follow a map to the city. Red Cap summons a mole troll, that clumsily chases Jared and Mallory through the sewer. At the house, Simon and Thimbletack realize Jared took the book, and faked out Thimbletack with a large cookbook.Meanwhile, Jared and Mallory find their way into the city, escaping the mole troll, after it is run over by a truck driver. Mom sees them outside of her window at work, wondering what they could be up to. Inside the asylum, Jared and Mallory greet their great aunt Lucinda (Joan Plowright). Lucinda allows them to see the fairies gathered by her window sill, and then hurried them inside when Jared reveals he has the book. Jared wants to know what to do, and Lucinda explains what happened to her father. Ina flashback, we watch Arthur making the circle, and Lucinda playing near the mushrooms, not knowing about the safety. She is attacked by goblins, and Arthur rushes to save her. In protection, Arthur is taken away by fairies while Lucinda is left to live her life fatherless. After the story, she tells the two that Arthur is still alive, and that he is in a sacred glade held captive by the sprites. Suddenly, goblins burst through the window and tear out pages of the book, and Lucinda fends them off with a handful of salt. Then, mom comes in to find everyone screaming.Helen accuses the two siblings (on the way home) that they are simply using this fantasy to find a way out of the house. Jared says dad left because all Helen wants to do is yell at people, and then slams the car door, and stomps into the house " I hate you, and I dont wanna live with you!" he says.Inside, Thimbletack yells at Jared for taking the book, and then Jared confesses how the goblins stole pages. At the goblin camp, Mulgarath finds the page that destroys the circle.Jared realizes to find Arthur, they must find the sacred glade, and the only way to get here is by Arthur's pet, a griffin (Half lion, half bird). Jared summon the griffin, and the three siblings ride off to the glade, but not before Hogsqueal appears again, and gives them all the "sight"Griffin brings the kids to the glade, and Arthur is still there, breathing and alive. Jared tries to explain who he is and the situation, but Mallory and Simon are transfixed by a magical song of the sprites. Arthur and Jared talk about how Jared is the new book, using the knowledge to kill Mulgarath. Jared accuses Arthur of spending his life on a book that left Lucinda fatherless. He is kept in the glade for knowing too much. Jared and the other make a quick getaway, while Arthur distracts the sprites with a fake cookbook. Arthur is surrounded and presumably killed by the fairies.That night, Jared and the other prepare to attack the goblins when they break the circle and invade. Helen comes home, after running over an invisible goblin in the yard. She is freaked out, and has only the choice to believe that everything is real. The circle is broken, and the attack begins. Goblins are killed and burned with tomato sauce, salt, and knives. They pop through floorboards, windows and everything else. Suddenly, Mulgarath breaks in, and the fight continues as the house is smashed up. The Grace family sets up a homemade bomb with the stove and tomato sauce loaded in it. The bomb goes off, killing all the goblins. There is a sound at the door, it is Richard, Jared's dad. Jared knows the truth from Mallory, he did not intend to get back with mom and moved in with another girl. Richard has no idea what Jared wants to hear, and Jared stabs his dad through the chest. However, this is Mulgarath, disguised. Mulgarath begins to chase Jared through the house, transforming into a snake and following him up into the study. Thimbletack defends Jared, but is simply knocked back. On the roof, the fight continues, and Jared is left hanging on for dear life. He throws the book out into the air, and Mulgarath transforms into a raven, and flies away with the book. However, Hogsqueal, with an appetite for birds, eats Mulgarath whole. Jared falls to the ground, and admits he wants to stay with mom.A few weeks later, Lucinda is let back into the estate, and meets Thimbletack again, who is in a cast for being hurt by Mulgarath. Suddenly, a flurry of sprites appear, with Arthur. Arthur confesses he let Lucy slip away from him, and promises never again to do that. Father and daughter touch hands, and Lucy transforms into a little 6 year old again. The two walk hand-in-hand into the fairy world as Jared and his family walk back into the house.