During King Arthur's Christmas feast, a mysterious green knight appears with his green horse to challenge King Arthur's knights to a duel where each knight has one chance to hit the green knight in exchange of receiving a hit.
King Arthur's nephew, Sir Gawain accepts this challenge and deals a strike to the Green Knight's head, but he survives. Now Gawain has to wait for one year and a day to go and find a Green Chapel before the Green Knight returns a strike to him, which could kill him.
Gawain leaves the castle and searches for the Green Chapel, but ends up finding a castle in the forest and has to do a few exchanges with the lord and his wife in the castle. The wife then offers a green girdle to Gawain, but he does not exchange anything else with the lord, thus breaking the rules.
Gawain faces the Green Knight once more to receive his hit. The Green Knight does two fake out swings before he strikes Gawain, but was only able to make a small cut on his neck.
The Green Knight then reveals that the castle, the exchanges, and the lord was him and of his doings. Gawain realizes that he broke the exchange rules and thus promises to wear the girdle to represent his failure.