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In Rathcullen, Ireland at the turn of the century, Darby O'Gill runs Lord Fitzpatrick's estate with customary inattentiveness, preferring to tell stories at the pub about his experiences with the leprechauns that live in the nearby Knocknasheega hills. His daughter Katie keeps the estate tidy and tries to cover for her father, but Lord Fitzpatrick catches on to Darby's benign negligence and quietly hires a young Dubliner, Michael McBride, to replace the older man. Meanwhile, Katie's neighbor, Sheelah Sugrue, fancies her arrogant son Pony as the next caretaker, and urges an uninterested Katie to respond to Pony's romantic advances. One day, Father Murphy overhears Darby narrating a tale about his brush with the king of the leprechauns, Brian Connors, in which Brian outsmarted Darby by tricking him into asking for four wishes instead of three, thus immediately canceling all previous wishes. When friend Paddy Scanlon warns that leprechauns are dark magic, Darby jokes that he could cleanse his wished-for gold via the church coffers, prompting Father Murphy to reveal that he has been listening. The priest asks for a volunteer to pick up a church bell donated by a neighboring town, and after Pony refuses to run the errand without pay, Father Murphy convinces Darby to purge his sins by going. As a reward, the priest promises Darby the music of the bells. When Darby returns home, Fitzgerald is there with Michael, showing him the estate's state of disrepair. Darby accepts his demotion, which includes ample lodging at the guesthouse and half pay, but insists that he be allowed to inform Katie. Scheming, Darby then invites Michael to stay with him and Katie in the manor house, and tells Katie that Michael is a hired hand. Although she is attracted to the Dubliner, Katie spurns Michael after he expresses patronizing disbelief about leprechauns. Later, Michael urges Darby to tell Katie the truth, but Darby refuses, instead fetching his spirit horse, Cleopatra, from where she grazes in Knocknasheega. There, Cleopatra leads Darby to a well and nudges him down. Upon landing in the leprechaun palace, a magnificent salon filled with treasure and merrily dancing little people, Darby learns that King Brian believes he is "rescuing" him from his troubles by offering a life of rest and amusement. Not understanding why Darby asks to be returned to Rathcullen, Brian refuses to release him, prompting Darby to plan his escape. Knowing that leprechauns love whiskey, dancing and hunting above all else, Darby plays a hunting tune on his fiddle, playing faster and faster until the little people are whipped into a frenzy. They jump on miniature horses and tear out of the palace to begin a hunt, leaving Darby free to escape through a hole in the wall. He returns to his barn, only to find Brian awaiting him in a fury. Hoping to keep the king until sunrise, at which point his magical powers ebb, Darby tempts him with whiskey and song throughout the night. By morning, he is able to deposit Brian in a sack and order him to grant him three wishes, the first of which is to have the king at his command for the next two days. Darby then enters the manor house and informs a skeptical Katie and Michael that he is hiring Michael permanently with his "new fortune." Later, Katie brings lunch to Michael as he works and the two flirt. After fetching the church bell, Darby brings the wriggling sack into the pub and impresses his friends when the unseen contents consume a glass of whiskey. That night, Darby sneaks outside with the sack and Michael, assuming he is a poacher, waylays him. Trapped, Darby agrees to show him the sack's contents, but Brian transforms himself into a rabbit. When Darby then wishes that Michael could see Brian, Brian deviously agrees, but remains a rabbit. Soon after, Michael and Darby catch sight of Katie as she struggles to avoid Pony's kisses. Darby admits to Brian that he would release him if he could decide how to use his last wish, and Brian, realizing that Darby worries most about Katie's happiness, promises to find her a good man to love. To that end, Brian visits Michael and Katie that night as they sleep, instructing Michael to fall in love and Katie to remain aloof. The next day, the pair cannot help but carry out Brian's commands, and as Katie teasingly runs away from Michael, she collides with Pony, who picks a fight with Michael. After preventing fisticuffs, Katie urges Michael to kiss her. Brian, who is watching with Darby, dances with delight, but just then Darby hears "his" bells and, entranced, puts off making his final wish. The next morning, Sheelah reads a postcard from Fitzgerald that identifies Michael as the new caretaker. After leaving the card where Katie can read it, she encourages Pony to run Michael out of town. Soon after, an angry Katie informs Michael that her father is only trying to save face with his tales about Brian, and although Michael begs her to stay on at the house as his wife, she rebuffs him. Instead, she runs to the pub, where she angrily pulls the sack out of Darby's hand, unintentionally humiliating him by revealing to the crowd a rabbit inside. Later, Michael and Darby discover that Katie has gone to the dangerous hills to retrieve Cleopatra. Michael tries to follow but Pony knocks him out, until Darby finds and revives him. Together, they race into the hills, only to discover Katie near death, a banshee spirit hovering above her. They bring her home, but her fever rages, and as the costa bower, or death coach, approaches, Darby uses his last wish to turn it away. When Brian informs him it will not leave empty, Darby wishes the coach would take him instead of Katie, and Brian sadly accords his wish. As he leaves in the coach, Darby is heartened to see Brian beside him. Brian praises Darby as a grand adversary, and informs him that Katie is now awakening in Michael's arms. He then tricks the despondent Darby into wishing that they could travel to heaven together. Gleefully, Brian announces that this fourth wish has rescinded all previous wishes, and the coach whisks Darby home. Days later, when Pony scoffs at Darby's tale of cheating death, Michael punches him, then announces to the cheering crowd that King Brian told him to do it.