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Recently divorced Helen Grace (Mary-Louise Parker) moves into the Spiderwick Estate in the woods with her children when it is given to her by her elderly aunt Lucinda (Joan Plowright), though identical twins Jared and Simon (Freddie Highmore) and their older sister Mallory (Sarah Bolger) do not want to move from New York. When Jared uncovers a dumbwaiter system behind a wall, he finds a monogrammed key and discovers the study of the late owner of the estate, Arthur Spiderwick (David Strathairn). Jared then uses the key to open a chest. In it, he finds Spiderwick's field guide to fairies; although an attached note warns him not to read it, he does so anyway. When Jared explained about his discovery on the existence of magical creatures, Helen and Mallory don't believe him.
Soon after, Jared meets a brownie named Thimbletack (Martin Short), who explains that magical creatures are normally invisible, but can reveal themselves at will. He tells Jared about a protective circle that Arthur Spiderwick placed around the house and gives him a stone with a hole through which he can see fairies.
However, a shapeshifting ogre named Mulgarath (Nick Nolte) wants the field guide for himself so he can rule over all fairy-kind. He sends his goblins, led by Redcap the Pompous Goblin General, to obtain it and they kidnap Simon, mistaking him for Jared. Meanwhile, Jared meets Hogsqueal (Seth Rogen), a hobgoblin and bitter enemy of Mulgarath because Mulgarath killed his entire family. Hogsqueal gives Jared the ability to see fairies without the aid of the stone by spitting in his eyes. Mulgarath lets Simon go and berates Redcap for failing his master. Jared finds Simon and both fight over the book, which is spotted by the goblins. Together, the twins flee to the house, though Simon is injured when one bites his leg. Mallory is then attacked by the goblins, but manages to kill several using her fencing skills, making her finally realize that Jared is right. Inside, Thimbletack informs them that Mulgarath will kill all humans and fairies who oppose him if he gets the book.
They resolve to destroy the book by cremating it in a fire, but the flames do not harm it due to a protective spell placed upon it. With no other options, the children decide to visit their great-aunt Lucinda, now in a psychiatric hospital, for advice. While Simon distracts the goblins, Mallory and Jared manage to reach a tunnel under the estate. They are pursued by a mole troll and only narrowly escape it when it is struck by an oncoming vehicle. Lucinda tells them that they need to find Arthur Spiderwick and have him destroy the book. However, Arthur is being held captive by Sylphs, a type of fairie. Suddenly, Mulgarath's goblins attack them and steal several pages from the book before they are driven off. In the woods, Mulgarath violently berates Redcap for not bringing all of the book, as most of the information in the stolen pages were useless, but he is pleased by when he discovers that one of them has information that tells them how to break the protective circle by moonrise. Mulgarath and Redcap prepare to make the potion for the upcoming night. Meanwhile Helen, who drives Jared and Mallory home, doesn't believe them on what's going on and accuses them of using that as an excuse for wanting to go back to New York. Jared then gets in a heated argument with her on why his father left her because of her not listening and starts yelling. Once home, Jared tells Helen he hates her and doesn't want to live with her. Later, Hogsqueal warns Jared, Simon, and Mallory about Mulgarath's plan and gives Simon and Mallory the ability to see fairies. Jared then tries to call his father, but Mallory tells him he has moved in with another woman and will not return to them as he promised, making Jared regret his angry words he told Helen.
Jared, Simon, and Mallory use the book to summon Arthur Spiderwick's pet, a griffin, which takes them to the realm of the Sylphs. There they meet Arthur, who has not aged but is also unaware of the time he has spent there. The children ask him to destroy the book only to find that Thimbletack had switched the pages. He also informs them that the Sylphs won't allow them to leave as they'll be held captive like he is, but helps them escape by distracting them. Once home, they try to convince Helen of the imminent threat of the goblins and the existence of magical creatures. At first, Helen refuses to listen until Thimbletack appears and they show her the goblins outside, finally shattering her disbelief and making her agree to help stop the attack. At this time, the goblins have finished spreading the potion, which successfully breaks the circle when the moon rises. Jared, Simon, Mallory, and Helen arm themselves with steel knives and home-made tomato sauce/salt bombs prepared by Simon earlier. The family successfully fend off the attacking goblins, though the house suffers considerable damage in the process. When they are forced into the kitchen by Mulgarath's arrival, they place all of their bombs into the oven, detonating them and killing all of the goblins, including Redcap.
Richard (Andrew McCarthy) enters the house and tells Jared that he came to apologize. Jared, realizing that it is not his father, stabs him in the stomach, revealing him to be Mulgarath in disguise. Jared escapes with the book through the dumbwaiter while Mulgarath gives pursuit in snake form and injures Thimbletack. On the roof, Jared throws the book into the air; Mulgarath transforms into a raven and catches it, but he is snatched and eaten by Hogsqueal, avenging his family and the scattered pages fall on the ground. Jared then climbs down the roof and he and Helen reconcile for their argument earlier and for the latter to apologize for not believing him. Hogsqueal and the Graces pick up the scattered pages of the Field Guide.
The Graces bring Lucinda back to the house, showing her the repairs being made to the house in the aftermath of the goblin attack and reintroducing her to Thimbletack, who is alive. Suddenly, the Sylphs appear, bringing Arthur, as he was allowed to visit his home since the book was now safe. He cannot remain outside of the fairie realm, or he will turn to dust. Lucinda asks to be taken with him instead; the Sylphs transform her back into her six-year-old self and spirit the two away as the Graces watch and then resume their normal lives with Thimbletack, Hogsqueal, and the Griffin.
Why would fire not harm the book?
Protective spell