Rosaleen dreams her sister is attacked and eaten by a pack of wolves in the woods. In a fairytale village, Rosaleen attends her sister's funeral with Granny. Later, as they travel through the woods to Granny's house, she is warned to keep to the path otherwise she'll meet her sister's fate.
That evening, Granny knits Rosaleen a red cape and warns her never to trust a man whose eyebrows meet in the middle. Granny tells the story of a woman in the village who married a travelling man. On their wedding night, he answers the 'call of nature', and never comes back. The bride sees a pack of wolves howling outside and believes they have killed him. She remarries, but her former husband returns, turns into a wolf and tries to attack her, but is killed by her second husband who arrives home just in time.
The next day Rosaleen flirts with a village boy and later on he asks her to walk with him on Sunday. That night she hears her parents having sex. The next morning, she asks her mother if her father hurts her, but her mother tells her that if there is a beast in men, it meets its match in women. In the chuchyard, Granny tells her a story of how a priest's bastard, born feet first on Christmas day with eyebrows that meet in the middle, is predestined to meet the devil in the woods.
After church, Rosaleen and the boy go for a walk into the woods and he tries to kiss her. Unsure at first, she is goaded into kissing him, but then runs off into the woods, challenging him to catch her. She soon loses him and roams alone in the wood. On the way back to the village the boy discovers a wolf has killed a cow. Rosaleen's father is furious she's not with him and exchanges blows with the boy's father, but then Rosaleen reappears.
The men form a hunting party to search for the wolf. As they wait for the men to return, Rosaleen tells her mother a story of how a betrayed, pregnant valley woman (a witch) turns her former aristocratic lover, his new bride and the wedding party into wolves. Rosaleen's father returns, carrying a severed hand that was originally the forepaw of the deceased wolf. He believes it was the wolf-man that killed his eldest daughter.
The next day, Rosaleen heads off alone to her Granny's through the woods. She carries a knife to protect her and a basket of food and drink for her Granny. She meets a huntsman whose eyebrows meet in the middle. She agrees to have a picnic lunch with him. He shows her his compass and wagers that he can reach Granny's house before her. She has to promise to kiss him if he wins. When he arrives first, Granny immediately realises he is a werewolf. She burns his hand defending herself, but he decapitates her. Rosaleen sees blood outside and guesses the fate of her grandmother. She finds the huntsman in Granny's chair and asks him where she is. He pretends she's just outside, but then her broken glasses fall from his lap and she notices Granny's hair burning in the fire. She tries to stab him but fails. He tells he to take off her clothes and put them in the fire. She shoots him with his gun, but misses. She kisses him (because he won his bet) but then shoots him, injuring his shoulder, and causing him to turn into a wolf. When he whimpers with pain, she tells him a story about a wounded female werewolf who in human form seeks help from a priest. He takes pity on her, bandages her wound, and she returns to the world below.
When a search party arrives at Granny's house looking for Rosaleen, all they find is a wolf wearing her crucifix. Realising that the wolf must be her daughter, Rosaleen's mother stops them from shooting her. Rosaleen the wolf runs into the night with the other wolves. They run into the real world and crash through the sleeping girl's (Rosaleen's) window. She wakes and screams.
