The first volume follows the three Bone cousins as they meet the inhabitants of a mysterious valley and seek their help in finding the way back to their home in Boneville.
The three Bone cousins are lost in the desert. After finding a mysterious seemingly hand-drawn map they are attacked by a swarm of locusts. Fone Bone barely escapes with his life, but falls off a cliff. Climbing up the other side, he finds a trail of Smiley's cigars. Following it, he meets two rat creatures who attempt to eat him. However, he is rescued by the Great Red Dragon. Soon after, he meets Ted, a wise bug who suggests that Fone seek consel from Thorn, but warns he should do so before winter arrives. Following a spontaneous blanket of falling snow, marking the beginning of Winter, Fone decides to stay in the Valley until Spring when he can continue his search for Phoney and Smiley.
Fone Bone quickly makes friends with Miz Possum and her three boys, but continues to be harassed by the rat creatures and still searches for the mysterious Thorn. However, after a second rescue from the ever-present Great Red Dragon, he discovers a young woman, unintentionally, but sultrily relaxing in a hot spring pool. After she sees him hiding and suggets that they share the pool together, Fone emerges and through brief and ungainly attempts at conversation by Fone, he realizes that she is Thorn. Hoplessly in love with Thorn he willingly follows her back to her farm where she says her Grandmother can help him further.
Fone Bone is staying at Thorn's house, and helping with chores prior to the arrival of Thorn's grandmother, Gran'ma Ben, who is coming from the annual Great Cow Race. Fone Bone shows Thorn the map they found in the desert, which Thorn finds strangely familiar. Meanwhile Phoney Bone meets Gran'ma Ben, and instantly gets on her wrong side. He and Fone Bone are reunited when Gran'ma Ben arrives at the farm house.
The day before the Spring Fair at the nearby town, Fone and Phoney are helping out at Thorn and Ben's farmstead. Seeing the opportunity to make some money, the greedy Phoney sneaks out to go to town early, but en route he encounters the two Rat Creatures and their ruler, Kingdok. He overhears the Rat Creatures are on the lookout for a "small bald creature with a star on its chest", a clear description of Phoney Bone himself. The Rat Creatures are called to high council with The Hooded One, a mysterious figure who wears a brown cloak with the hood pulled down over his face, and wields a scythe. The meeting adjourns with The Hooded One sending every Rat Creature in the valley to attack the farm house.
With the farm house under attack, Gran'ma Ben fights off the Rat Creatures, giving Thorn and Fone the chance to escape. When Thorn and Fone get surrounded Fone calls out to the Great Red Dragon for help. The dragon appears, announcing it's arrival with the smell of brimstone, chases the Rat Creature army away. They return to the farm house to find it wrecked and smoldering. Meanwhile, Phoney Bone arrives at the Barrelhaven tavern and discovers, to his astonishment, Smiley Bone working there as a barman. He then meets Lucius Down, owner of the barn, and instantly gets on his wrong side. It is then that Phonicible discovers that the residents of the valley use products and services as pay—Phoney's drinks cost "two eggs"; Phoney gives Lucius two dollars, which are ripped apart, much to Phoney's shock; Smiley tells him the truth.
Thorn, Fone and the Dragon arrive back at the farm to find Gran'ma Ben alive. Clearly she and the Dragon know each other (the Dragon addresses her by her first name, Rose). However, Gran'ma Rose Ben remains distrustful of the Dragon, despite his driving off the Rat Creatures. Meanwhile, Phoney Bone is forced to work under Lucius Down, proprietor of the Barrelhaven tavern, to pay off his bar tab (his coveted Boneville money being worthless in the valley). As he plans ways to get rich off the villagers' goods instead, he is visited by The Hooded One, who claims to want his soul. When Thorn, Ben and Fone Bone arrive in town for the Spring Fair, the three Bone cousins are reunited at last.