A dwarfish wizard craves a child but believes he will never have one. Nobody will ever love him, and adoption agencies would reject him. Then, he hears a rumor about the miller's daughter. Evidently, the miller bragged that his daughter could spin straw into gold, hoping to draw the attention of the king. The king locked her in a tower full of straw to prove it—or die.

The wizard decides to help the girl out of the kindness of his heart and learns the spell to spin straw into gold. He enters the tower through a secret passageway and helps her. On the first and second nights, she gives him cheap jewelry as a thank you, even though he expects no gift. When he spins, she puts her hand on his shoulder and it's the closest he's ever felt to love.

On the third night, the girl confirms that she'll marry the king, even though he threatened to kill her. The wizard thinks about how the king would make a poor father, imagining he would abuse his children. The wizard decides he does want something—the girl's firstborn child, to raise as his own. He says he'll make a great father. The girl only agrees because she believes otherwise the wizard will reveal that she's a fraud.

The girl becomes queen and the wizard comes to collect the child, appearing before the king and queen. The girl urges him to reconsider, but he refuses. He offers her a way out however—if she can guess his name in three days, the deal is off. On the third day, he gets cocky and drunk and sings a song including his name at his campfire in the woods. One of her messengers overhears.

The next day, she guesses his name. There's a moment when he thinks she might not reveal it and allow him to take the child despite her knowledge—perhaps even run away with him. But the moment passes by. Emotionally wounded, Rumpelstiltskin splits in two, literally. Over time, he learns how to join the two halves of his body together and hobble around his cabin in the woods, getting by.