Morag takes on a magical disguise to kidnap the young Ewoks.
Around a campfire, Chief Chirpa is telling a group of woklings and young Ewoks the story of the Sunstar Shadowstone, a very powerful gem. He explains that Morag the Tulgah witch wanted it for herself, and once came to the Ewok village looking for it. But a young Ewok warrior fought back, and was carried away to Morag's home in Mount Thunderstone. However, the young Ewok soon learned Morag's magic, and turned it on her, which broke the Sunstar Shadowstone in half.
The Ewok managed to escape with the Sunstar half, but the Shadowstone remained in Morag's lair. Chief Chirpa then reveals that this Ewok he is speaking of is actually Logray, the village medicine-man. Wicket is skeptical, but a wide-eyed Teebo claims that Logray is capable of anything. The children thank Chief Chirpa for the story and go home. Wicket and Teebo are the last ones to leave, the latter determined to become the elderly medicine man's apprentice.
The next day, Teebo knocks on Logray's hut and is immediately terrified by one of the medicine man's ceremonial masks. He shyly reveals his wizardry ambitions to Logray and is given a list of chores to fulfill before getting to do magic. The young Ewok accepts.
Some time later, Teebo is struggling with a gigantic Lokka fungus and his sister Malani, who was playing nearby, notices that he is carrying it to their home, and not Logray's hut. Trying to turn around, Teebo drops the fungus, which rolls on, passing Chief Chirpa on its way and crushing to pieces inside of the hut. Chief Chirpa and Teebo run inside, to discover a not-so-surprised medicine man.
Logray then orders Teebo to clean up the place. Scared and disoriented, he mistakenly grabs a wand instead of a broom and everything in the hut goes back to normal. Teebo asks Logray if he's the one who did that. Logray confirms, but notes that a good wizard should rely on himself first and magic second. The two elders leave to find another Lokka fungus.
Meanwhile, Wicket and Kneesaa wonder how Teebo is doing and they discover Latara spying on her crush through a window. Wicket lectures Latara on sneaking upon others, solely to take her place. A lot of dust is rising and the three assume that their friend is doing magic. They enter the hut to discover Teebo dusting a large carpet. He cheerfully greets them, but they burst into laughter and say that they assumed he was doing magic. Angry, Teebo takes Logray's prism pebbles he's been eying for a while and creates an illusion of a flying Munyip.
He then suggests taking his friends out to the forest to show them more magic, claiming that Logray always lets him borrow his stuff. Wicket and Latara are eager, while Kneesaa seems somewhat reluctant, but eventually accepts. After they have found a clearing, Teebo makes Latara's flute float using Logray's ceremonial wand, but ends up breaking both the wand and the flute. All of this is observed by Morag from the bushes. As three angry young Ewoks are ready to leave their friend alone, believing they had enough of his "crazy magic"; they hear somebody singing.
The singing leads the four young Ewoks to a golden cave where a female with feline features is sitting and singing. As soon as they're inside, she transforms into Morag and has her Yuzzum servants capture them. Back in his hut and seeing that Teebo is not there, Logray takes a look at his crystal image spinner, where he sees the Tulgah witch. She offers him a trade - if he gives her the Sunstar, she will set the four younglings free.
Morag's lava armor turns to stone, killing her.
Having determined it's time for him to face his archenemy on his own, Logray takes the Sunstar and heads to Mt. Thunderstorm, paralyzing a couple of Yuzzums on his way to Morag's lair. Once he's arrived and demanded that the witch frees the younglings, she wraps him in enchanted vines, but he uses the Sunstar to set himself free. Tired, he sits down to catch a breath, and Morag orders the Yuzzums and the Skee to attack. Eager to save his mentor Teebo throws away the Skee, while Kneesaa and Latara wrestle the Yuzzums.
Morag uses the Shadowstone on her wand to summon the Sunstar and Logray appears to have given up without a fight. Having assembled the powerful articraft, Morag causes an earthquake and activates the volcano located under the mountain. The Ewoks flee and on his way out and leaning on his apprentice, Logray sets the paralyzed Yuzzums free. Terrified of their mistress' hunger for power, they flee immediately.
Morag is submerged into the lava, solely to re-emerge through one side of the mountain as a lava monster with the Sunstar Shadowstone on its forehead. She catches up with the young Ewoks and a tired Logray at the edge of the forest. The old medicine man warns her to come no further, but she disarms him. Teebo emerges from the young Ewoks' hiding place and picks up the staff.
Despite Morag trying to hit him with beams, he manages to throw the staff back to Logray, who then sticks it into the soil and starts chanting. Water begins to gush from the ground. Morag screams, as water cools down the lava and hardens it into stone. With one last breath and one last calling of Logray's name, she bends forward and crumbles to pieces, seemingly taking the Ewok shaman with her.
Wicket, Teebo, Kneesaa and Latara start removing the stones, but realize that they would never be able to remove them on time. As Latara starts crying and Wicket is comforting Teebo who's convinced all of this is his fault, a beautiful heart-shaped tree grows from the rubble and Logray is sitting on one of its top branches, holding the gem. Rejuvenated and calm, he climbs down. Teebo rushes to him to apologize, solely to be told that even though he abused magic, almost got everybody killed, wasted the ceremonial wand and the prism pebbles, he was relying on himself in the time of trouble.
The story ends with Logray telling a story of the Sunstar Shadowstone by the fire in the Ewok village, with Teebo by his side. This time, both the young and old villagers are listening, as the medicine man says that the gem finally returned to the village in its entirety, while Morag's life force returned to the forest and became, in the end, a thing of beauty. Logray then hands the bag containing prism pebbles over to Teebo who tosses one of them into the air to make fireworks.
This episode was adapted into children books Sun Star Against Shadow Stone and The Shadow Stone: An Ewok Adventure.
This episode shows a character saying the well-known phrase "I have a bad feeling about this," from the Star Wars series. Kneesaa says the line after seeing a strange light and hearing somebody (actually Morag) singing in a cave.
This episode was released on DVD in 2004 as part of the The Haunted Village feature film.