Justin and Marissa are stuck in the middle of an icy wilderness trying to find their dad. Their sled dogs take them out further until they see something glowing in the woods. They suddenly find themselves stuck on a piece of ice and floating off in the ocean. No worries though. It's actually just a story their dad is telling them.
Their dad is Richard Clarke, this super famous adventurist and writer. He brought his kids out into the middle of nowhere to search for the lost legend. He won't tell them much about it except that if they find it, they'll never need money again. When they fall asleep that night, the kids hear something in the woods. It turns out that it's a silver dog.
Marissa freaks out and tells him not to touch it because it might be a wolf. Since Justin loves animals though, he starts petting it. The dog has a note tied to its collar that says to follow "Silverwolf." They run to tell their dad about it, but they can't wake him up. The dog takes off into the woods, and in a move completely unlike any other Goosebumps books, they just go to sleep instead of following it.
After talking for what seems like way too long and hearing the dog howling in the woods, they eventually do go after it. They wind up lost in the woods though because they followed a wolf instead of the dog. This leads them to fall down a massive hole and Justin to scream about it being a bottomless whole when they actually only fall down a few feet.
They then wind up finding this random cabin in the woods. Silverwolf is there with some woman who introduces herself as Ivanna. She feeds them soup, shouts that it's actually poison, and then laughs it off as a bad joke. After a few more bad jokes, she tells them they need to complete a test in the Fantasy Forest if they want to find the lost legend. Before she can tell them anymore, a furry black creature runs in and attacks them.
Ivanna introduces the creature as Luka right after it attacks Justin. In a creepy twist, it's a dog covered in black fur with a man's face. She lets them know that it will be their guide when they go to the forest. They go to sleep and wake up in the middle of the woods. Marissa winds up almost lost but finds her way back.
They don't go too far before they come across a bunch of weird blobs on the ground. Turns out that those blobs are eggs. Luka gets distracted by a squirrel and runs way, right before they find a note from Ivanna warning them not to let him out of their sight. The eggs then hatch a bunch of mice, which attack the kids. They get away just in time for an earthquake to hit and a tree to drop on Marissa.
Turns out that the tree is just fake. They see a ton of bats flying at them that are also fake and make it to a stream. Their boots get stuck in the mud, and Marissa sees a big plug holding the water in the stream. When they finally get out, they get attacked by a bunch of giant cats. Luckily, Justin has some wind up/mechanical mice in his backpack, which he uses to distract them so they can get away.
They find their way back to the cabin and see Silverwolf inside. They also find Ivanna, but Justin sees something sticking out of her back. Apparently, Ivanna was some wind up toy. Luka then goes crazy, runs into the center of the room, and stands up on his back legs. Luka peels off his fake fur and reveals that he's a real guy who created a bunch of fake creatures in the woods to scare off those looking for the treasure. The kids passed his tests, so he gives them a silver chest and sends them back to their dad with Silverwolf.
Not long after leaving the cabin, Justin realizes that someone is following them. They run away but find out that the noises they heard was the sound of their dad looking for them. All three get excited about the chest until they open it and find an egg inside. Silverwolf leads them back to Luka, who apologizes and says he thought that was the treasure they wanted. He then gives them directions to the lost legend.
Their dad leads them to a tiny village that looks deserted, and they start shouting for someone. A bunch of guys in brown robes come out and get excited when they ask for the legend of the lost legend. They hand over a silver chest and everyone packs up and runs away. Inside the chest is a warning that whoever finds it will be lost forever. They suddenly look up and realize that they are now the lost ones.
*Seriously, they don't follow the dog? Don't the kids in these books love running off and doing stuff without their parents knowing?
*Would you really want to go into the deep woods with a creature by your side that just bit your leg?
*So apparently Luka wears a fake dog suit and runs around on his hands and knees. That takes some serious skill and seems pretty painful too.
*How long have those people been guarding the lost legend? They have a whole village they built, which they completely desert, and they seem pretty comfortable living there too.