In the early history of Bright Tree Village, a terrible forest monster known as the Raich had menaced the native Ewoks by hypnotizing the local animals with a natural made gas and leading them away to be eaten. This action endangered the village's growth, as they relied heavily on animals as beasts of burden and as pets. Fearful that the Raich would end their way of life, but unable to stop the powerful creature, the Ewoks sought outside help. The Ewoks solicited the Two-headed Gonster, a self-proclaimed beast catcher to help them. The Gonster created for the Ewoks a magic cap, that when placed upon the Raich's head, would transform him into a harmless tree.
With the secret weapon in tow, the Ewok warriors tracked the Raich back to its lair, and after a long and arduous battle, they were able to place the cap onto the creature's head. True to the Gonster's word, the Raich began to change shape, morphing into a harmless tree. With the Raich defeated, the spell that the creature had placed on the animals was lifted, and the threat towards the Ewok way of life was ended. To make sure that no one ever removed the cap, the event was recorded in the scroll of the Raich, to be passed down from generation to generation. Young Ewoks were then warned never to go near the Raich's tree or remove the cap for fear of releasing the monster.
However, even with all the precautions, the Raich was once again freed when the Ewok, Wicket Wystri Warrick removed the cap, believing it to be just another piece of clothing to go to the Shadow Night Festival with his sweetheart Kneesaa a Jari Kintaka. The Raich, free from its prison, was able to destroy the cap that had kept it captive and began to institute its reign over the forest creatures once again. Using its naturally made gas, the Raich was able to mind control many of the Ewoks' animals, as well as various untamed forest creatures. The Raich brought the animals back to its cave and began to feast.
Filled with guilt over the turn of events, Wicket and his friends Latara, Teebo, and Kneesaa a Jari Kintaka resolved to end the crisis by obtaining another hat from the Two-headed Gonster. Equipping hang gliders, the Ewoks made their way to the Twin Hills, the home of the Gonster. After pleading with the Gonster to create another hat, the Gonster agreed to make another hat for the Ewoks. However, the Gonster made it clear that it would take time to create a hat that could trap the Raich. Not wanting to wait around, Kneesaa and Wicket decided to make their way to the Raich's cave and place Dreamflower Potion into his water. The Ewoks hoped that the potion would put the Raich to sleep, and the job of placing the cap onto the Raich would be much easier.
Unfortunately, after Wicket and Kneesaa had arrived at the Raich's cave, the plan soured. As Wicket tried to carefully place the potion into the Raich's water bowl, he accidentally slipped and fell, pulling the entire bowl with him. The water in the bowl tipped out onto the ground with a giant splash, alerting the Raich. The Raich then chased after the two Ewoks and captured them. The Raich then tied the Ewoks up and placed them in his cave as his captives. Wicket and Kneesaa were forced to spend almost the entire day as the Raich's prisoners until Latara and Teebo, who had stayed behind with the Gonster to await the completion of the magic cap, arrived with the secret weapon in tow.
Seeing that their friends were in trouble, Teebo devised a plan of sneaking into the cave and rescuing Wicket and Kneesaa by posing as a Zomba. Acting as though he was just another animal that the Raich had control over, Teebo was able to sneak past the Raich and untie Wicket and Kneesaa. Unfortunately, as the Ewoks tried to sneak out of the cave, they inadvertently alerted the Raich to their presence, and he began to chase the group through the Dead Forest.
With the Raich in hot pursuit, the Ewoks tried to get around behind him in order to place the cap on the Raich's head. However, at the same time, the Raich began to command the animals of the forest to attack the fleeing Ewoks. Pursued by a Zakool, Teebo and Latara were forced to make a hiding place out of a tree and were unable to help Wicket in placing the cap on the Raich's head. Likewise, Kneesaa began to be chased by her pet Bordok Baga and was unable to help. All alone, Wicket was still able to use a hanging vine to swing himself behind the Raich and place the cap upon his head. Unfortunately, the Ewoks had forgot the sparkleseeds, an ingredient to the hat which caused it to work on the Raich.
The Raich laughed at the Ewoks' failed plan and ripped the hat from his head, flinging it into the air. However, Teebo, still lodged in a tree avoiding the Zakool was able to catch the cap. Latara then put the sparkleseeds onto the cap and was able to throw the hat back to Wicket on the ground. Resolving that it was now or never, Wicket charged the Raich and was able to wedge himself through the monster's legs. Wicket then jumped on the creature and thrust the cap onto his head, turning him back into a tree.
With the Raich defeated, the animals went back to normal, and the crisis was ended. Because Wicket and his friends had not told the rest of the village that they had accidentally released the Raich, they resolved to keep quiet about the whole affair, so as not alarm the older Ewok leaders. Wicket, hungry for recognition, almost spilled the truth to Chief Chirpa at the Shadow Night Festival but was stopped just in time by his sweetheart Kneesaa.