Paul and Maureen are siblings who live on the island of Chincoteague, off the coast of Virginia. On a nearby island live a group of wild horses. The children have their hearts set on the capture of the elusive Phantom, a mare that has never been captured. During the annual roundup called Pony Penning Day, Paul captures Phantom and her newly-born colt. Paul and Maureen are able to purchase both horses and work together taming and training Phantom for the upcoming race at the next Pony Penning Day. Through it all, however, the children realize that Phantom is not happy in captivity and yearns for the herd of wild horses. After Phantom wins the race on Pony Penning Day, the children release her so that she may return to her home on Assateague Island. Misty, her colt, is happy to stay with the children.