The Green Knight offers a deal to king Arthur, but Sir Gawain accepts it. Gawain chops off the green mans head, who then picks his head up and leaves.
Cut off my head and in a year I'll chop off yours!
Gawain goes to North Wales and stays at a castle. The lords wife attempts to seduce Gawain.
Gawain refuses a love token from her but accepts a magical green girdle that protects the wearer from death.
Gawain goes and finds the Green Knight. When the green man attempts to cut off his head, Gawain flinches. The Green Knight threatens Gawain for not showing courage.
The Green Knight finally swings the axe, but only nicks Gawain's neck. Gawain shouts that the deal has been satisfied.
The Green Knight explains that he is actually the lord of the castle Gawain previously stayed at. He set up this whole thing to test Gawain. Gawain passes the test, proving himself as a worthy knight.