Theodore's Plate tells the story of Theodore, the youngest child of a poor peasant couple that live simply in the forest. The family's most precious belonging is a set of plates hand-crafted for them by a local potter. One year, Theodore drops his plate, shattering it. Father mends the earthenware, and Theodore proudly uses his cracked plate at all holidays and special events.

On Christmas Eve, as the family prepares for their simple feast, there is a knock at the door. A Traveler is lost in the forest and Father invites him inside. Unknown to the family, the weary, cold Traveler is their ruler, King Edward, in disguise. The family offers their guest food and lodging for the night. The Traveler 's portion is served in a wooden bowl, as there are no more plates.

Theodore spontaneously exchanges his precious plate for the Traveler's battered bowl. King Edward is deeply moved by Theodore's generous act.

After dinner, everyone gathers around the Christmas tree. The family is very poor, so there will be no presents next morning. Their holiday tradition is to tell stories about their Christmas wishes. Each person describes their fantasy gift, then Theodore shares his dream: having a soaring falcon to train and love.

King Edward leaves early the next day, meeting King Robert to discuss peace between their realms. Upon sealing a treaty of friendship, King Edward returns to his castle. But he cannot forget the hospitality extended by the peasant household in the forest; particularly Theodore's selfless act by exchanging his cherished plate for the Traveler's worn bowl. Inspired by Theodore's generosity, King Edward returns on Christmas afternoon, bearing presents for the entire family. King Edward brings a very special surprise for Theodore, a magnificent falcon!

The tale ends with the King pledging to dispatch his Master Falconer to teach the lad how to train and care for his avian best friend. That story is the subject of the next volume: "Theodore's Falcon."