It is October in the forest, and the heroine (sometimes addressed in the second person, as “you,” but usually in the first person as “I”) enters the woods and admires the beauty of nature. She is trapped already, though she does not know it. She hears two notes of bird song and is drawn irresistibly forward, and she comes to the house of the Erl-King.
The heroine here is again young, innocent, and trapped by a male fantastical creature. Carter begins to shift the scene of her stories into a woodland setting. An “Erl-King” is a king of fairies in old German folklore. He is sometimes a force of evil, but other times merely mischief and magic.
The Erl-King is in his garden, surrounded by wild animals and playing his pipe, which was what lured the heroine in. His eyes are green and “can eat you.” The heroine describes the Erl-King: he lives alone in the woods, foraging for food and at one with the plants and animals. In his house he has many birds in cages, which the heroine thinks is cruel. He keeps his house very clean.
The Erl-King is another metamorphic creature living between the worlds of wildness and humanity. He is not associated with a specific beast, but more with the forest itself. The caged birds are first presented as symbols of the objectification of free souls (like the book’s heroines).
The heroine moves in with the Erl-King and they become lovers, though she is “at the mercy of his huge hands” and naked while he is clothed. The Erl-King plays songs on his pipe and lures in birds and animals. The heroine thinks about the Erl-King controlling the winds and capturing the birds. She notices that there is an old fiddle hanging on the wall, but all its strings are broken.
The heroine is seduced by the Erl-King, and again the motifs of the pornographic encounter and sex as a kind of violence return. But as with the heroine of “The Bloody Chamber,” here the heroine initially accepts her objectification and succumbs to the Erl-King.
The heroine describes more of her “embracements” with the Erl-King, and how he undresses her “like a skinned rabbit.” She feels like she is drowning in him when they sleep together. Winter approaches and the forest grows colder. The heroine muses on the Erl-King’s eyes – “what big eyes you have” – which seem to have captured her. She fears that she is trapped and the Erl-King will soon put her in a cage with his other birds.
Just like the heroine of "The Tiger's Bride" peeling the petals off a rose or having her skin licked away, the heroine here is “peeled” and must reveal her true self to the Erl-King, who holds all the power in the relationship. “What big eyes you have” is another reference to Little Red Riding Hood, which will come later. Already the separate stories begin to blend together and reference each other.
The heroine realizes that the Erl-King’s caged birds were once women like her, and she grows terrified though she still loves him. One day the Erl-King lets the heroine comb out his long hair, and she strangles him with his own hair. Then she sets all the birds free and they turn back into girls. She strings the old fiddle with the Erl-King’s hair and plays music on it.
Unlike in "The Tiger's Bride", the heroine here refuses to transform for the Erl-King – as his is not a transformation to be equals and lovers, but so that she can be even further objectified. The Erl-King’s cabin then become the bloody chamber, where the heroine has sex, murders the Erl-King, and then gains enlightenment about the nature of her relationship and herself.