Cimorene, the youngest princess of the kingdom of Linderwall, is frustrated with her cloistered, sheltered life. She is different from her petite, blonde, blue-eyed sisters in all ways. She is considered an attractive young woman, but is black-haired, tall as most of the princes who visited and very strong-willed. She is bored with her "proper" lessons in etiquette, embroidery, dancing, and how loudly to scream when being carried off by a giant. Cimorene bullies the castle staff into teaching her fencing, magic, cooking, and other interesting subjects that are "improper" for princesses to learn. When Cimorene reaches the age of 16, her fairy godmother and parents decide that something needs to be done about her.
The King and Queen take Cimorene on a state visit to Sathem-By-The-Mountains, a neighboring kingdom. Cimorene learns that they plan to arrange her marriage to Therandil, the handsome but slow-witted prince of the realm. Faced with the prospect of marriage to a man she dislikes and has nothing in common with, Cimorene decides to run away. Acting on the advice of a talking frog, she travels to the Mountains of Morning. There she meets a group of dragons, and volunteers to become the "captive" princess of the dragon Kazul. Kazul assigns Cimorene to cook for her and organize her library and treasure hoard.
Unlike most princesses, Cimorene likes her position and becomes good friends with Kazul. Unfortunately, Cimorene finds she must constantly deal with all the well-meaning knights and princes (including Therandil) who want to rescue her. On the advice of Kazul's friend, the witch Morwen, Cimorene decides to put a warning on the path to Kazul's cave. She hopes that a sign saying "Road washed out" will keep would-be heroes away.
While posting the sign, Cimorene encounters the wizard Zemenar. Cimorene tells Kazul about her meeting with this suspicious character, and Kazul explains that the dragons and the wizards disagree about the wizards' access to the Caves of Fire and Night. These caves are controlled by the dragons. They hold many magical secrets, and the wizards are always hoping to explore more than what the dragons will permit.
The wizards do not possess their own magic naturally, like the dragons. Instead they have staffs that absorb magic from any magical objects nearby - including dragons. Dragons react badly to having their magic absorbed. They suffer violent allergy attacks which often involve sneezing balls of fire.
One day Cimorene and her friend Alianora, princess to the less kindly dragon Woraug, find Antorell, the son of Zemenar, gathering herbs near the dragon caves. Cimorene brings a sample of the herb back to Kazul. The dragon is shocked when she sees what Cimorene has, and burns it up immediately. Yet even this brief exposure to the herb causes Kazul to fall ill for several days. The plant is dragonsbane, and it is poisonous to dragons. Kazul sends Cimorene to tell another dragon that the wizards are gathering dragonsbane. This news comes too late, as Tokaz, the King of the Dragons has already been fatally poisoned with dragonsbane.
Although Kazul is still ill, she must leave immediately to compete in the trials with Colin's Stone, a rock that magically chooses the next King of the Dragons. Cimorene hurries through the dragon caves on various important errands for Kazul. In the caves, Cimorene meets the Stone Prince. He is a would-be hero who was turned into a living statue during a failed quest.
Based on information from the Stone Prince and Alianora, Cimorene realizes that the wizards poisoned King Tokoz with the help of the dragon Woraug. The wizards plan to interfere with the magic of Colin's Stone to allow Woraug to win the title of King. In exchange, Woraug will give them access to the Caves of Fire and Ice and magical items held by the dragons.
Cimorene also discovers a way to melt wizards (similar to the witch-melting process in The Wonderful Wizard of Oz). With the help of Morwen, the Stone Prince, and Alianora, she foils the wizards' plan. Meanwhile, Kazul wins the trials fairly and becomes King of the Dragons. She ends the dragons' treaty with the wizards and promotes Cimorene to the position of King's Cook and Librarian.