Thor, the god of thunder, and Loki, the god of lies, habitually visit Midgard (Earth), and one evening they take refuge for the night at a lonesome farmhouse, inhabited by a couple of ordinary Viking peasants and their two children, a boy named Tjalvi and his younger sister Röskva. Thor generously offers one of his (immortal) goats which is dragging his chariot, as a feast dinner for all of them, but strongly warns any of the members of the household from breaking the bones. Loki, always treacherous, persuades the boy Tjalvi into doing exactly that, for the sake of the delicious marrow inside. Thor goes on to recount the Hymiskviða, specifically the part when he fished for the Midgard Serpent, Jörmungandr, to entertain his hosts.

The next morning, Thor revives his goat, but is infuriated when he discovers that the animal has become lame, caused by the breaking of the bone the previous night. Thor is craving for revenge, but Loki instead suggests that they take the boy Tjalvi with them to Asgard as a servant, which Thor reluctantly agrees to. Tjalvi on his part is not very courageous on going to Asgard or the prospect of serving 'the mighty gods' either, but his sister Röskva is very adventurous and keen to go, even though she isn't even a prospect (being a girl). Eventually the gods and their new servant leave the farm and go back to Asgard via the Bifröst bridge. Once they arrive, they soon discover that Röskva has stowed away in the chariot, and so she is allowed to follow the company and her brother to Thor's home Bilskirnir where his wife Sif and their two infant children are awaiting. Here, the two human children are put to hard physical work immediately, having to clean not only the mansion with its 540 rooms (sic) but also nursing the two infants, Þrúðr & Móði, and serving the gods.

The glamor of the 'immortals' and their world soon vanishes, as Thor is frequently away from home on new adventures, leaving Tjalvi and Røskva with all the hard work. As a regular friend of the house, one day Loki shows up with a small nonverbal jötunn boy named Quark, who almost immediately causes havoc in the thunder god's home. At first Loki claims that Quark 'followed him' home, but finally professes he 'won' Quark when he lost a bet with Útgarða-Loki and now has to keep the boy until he behaves properly. Sif is so upset when she finds out Quark has to stay at Bilskirnir, that she leaves the home with the two infants in distress, which in turn, makes Thor go crazy and destroy everything around him, until he finally storms out, leaving Loki, Quark, Röskva and Tjalvi behind.

Soon, the children and Quark find they have something in common and befriend each other, while Loki just makes himself comfortably in 'his' new home. He acts as a lazy and cruel master of the house and the children and Quark finally run away to look up the mighty chief of the gods Odin, who lives in nearby Valhalla and who they suppose will help them against the unfair behaviour of Loki. They find out he will not even listen to them as no one is allowed to disturb him, and so they run out into the forest and build their own treehouse, setting up their own life. Almost everything is pure idyll, until Tjavli is visited by the ravens of Odin, Hugin and Munin (who have appeared as the narrators of the story). They lead Tjalvi to a sacred well where they present him with visions of the future: there he sees Thor trying to hold up Jörmungandr, the sea drying up and Thor hastily aging and dying. Suddenly, Thor shows up and brings the children, his servants, back to Bilskirnir by force. Now he confronts Loki with Quark, demanding he return the boy to Útgarðar. Since Loki is unwilling and unable to bring Quark back to Útgarðar, Thor forces him to accompany him to Útgarðar, along with Röskva and Tjalvi.

The group travel Útgarðar, where the jötunn-king Útgarða-Loki offers to take Quark back if they can overcome a series of challenges. First, Loki is set to win a eating competition against a jötunn named Loge. At first Loki seems to be victorious but he loses when Loge eats the entire trough from which he ate. Thor is then challenged to drink from a giant drinking horn, but the horn does not seem to empty no matter how much he drinks (the audience is shown that the horn is magically connected to the ocean: Thor's drinking causes the sea level to drop). Thor demands another challenge, but the jötunns only laugh at him and ask to lift Útgarða-Loki's cat instead. Despite the seemingly-small size of the cat, Thor is only able to lift a single one of the cat's paws off the floor; to regain his honor and save face, Thor demands a trial by combat. Útgarða-Loki then calls for his ancient mother, Elle, whose feeble and aged appearance nonetheless frightens the other jötunns. Thor tries to wrestle her down but is unable to; instead he starts to age rapidly and the old hag wrestles him down to the floor instead.

While Thor wrestles the old woman, Hugin and Munin show Tjalvi, Röskva and Quark the visions again in a mirror: they see Loge moving strangely like fire, Thor trying to lift Jörmungandr, and Thor aging and dying. The children realize that the jötunns are using magic to cheat: the drinking-horn is secretly connected to the sea, Loge is actually an insatiable fire-spirit, Útgarða-Loki's cat is in fact Jörmungandr the Midgard-Serpent, and the old woman is really old age itself!

Tjalvi tries to stop the wrestling match, but Thor appears to die of old age before Tjalvi can reach him. Tjalvi weeps over Thor's body, and his tears restore Thor to life and youth. Quark throws the water on Loge revealing his true nature as a fire spirit, which puts him out and kills him. Tjalvi and Röskva call out the jötunns' tricks. Thor is angry that the jötunns' have cheated, but he and Loki have lost the bet, and so they are forced to keep Quark. But Loki reassures Thor not to worry: he has a plan.

The next morning, the two gods and the three children leave Útgarð together. Útgarða-Loki laughs at them from the palisade for losing the bet, but what had appeared to be Quark suddenly turns into a chicken: Loki has used his illusions to trick everyone into thinking the chicken was Quark, who is still inside the walls of Útgarð and now has to remain there with the other jötunns. This saddens both Quark and Röskva, who wave sorrowfully to each other as Thor and Loki leave Útgarð behind.

Back home at Bilskirnir, Thor gives Tjalvi a sword as a sign that he now sees Tjalvi as a man. Röskva, still seen as a child and feeling very alone and unwanted, walks sadly away into the forest, and returns to the treehouse which she and Tjalvi and Quark built together. Suddenly, to her great surprise and delight, Quark appears from inside the treehouse, having run away from Útgarðar. The two friends are happily reunited, with much embracing.[1]