Shortly after the Buddha passed into nirvana, a water fairy from the Lake of the Hidden Treasure witnesses the birth of an Indian hero, Padmasambhava, who is born in a giant lotus in the middle of her lake. He incarnates to help carry on the Buddha's teachings. Something happens that inspires her to follow him on all his adventures, and she is able to tell his story from her unique perspective.

King Ja discovers Padmasambhava, known affectionately as Pema, and carries him back to his palace, believing that his prayers for a son have been finally answered. A twist of fate leads Pema to the terrifying Chilly Grove Cemetery, where he develops his meditation skills and transcends many physical challenges. When the water fairy convinces him to revisit his birthplace at the Lake of the Hidden Treasure, Pema returns to teach the fairies and gnomes the secret to true happiness. Pema's loving kindness magnetizes the nature spirits to serve him devotedly, and with their magic, they assist him in his quest to spread Buddha's message to the people of India and Tibet. The fairy shares Pema's adventures with Mandarava, Emperor Ashok, Vajrakilaya, Yeshe Tsogyal, Emperor Trisong Deutsen, and the nature spirits of Tibet.

Pema is a Buddhist saint who befriends the nature spirits with his sincere reverence for the unseen work they do in balancing the earth, air, water, fire, and space within Mother Nature. He is aware that good-hearted humans must guide the spirits of nature by giving them loving attention--or else undivine forces can take them over and create chaos. The water fairy tells the significant events of Padmasambhava's life with the vivid detail of one who flew wherever he walked, and she shares his profound wisdom with charming simplicity.