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In King's Quest III, the story moves away from Daventry and King Graham to the land of Llewdor, where a boy named Gwydion is being kept by the wicked wizard, Manannan. According to the introduction, for as long as he could remember, 17 year old Gwydion has been held captive by Manannan as his servant, cooking and cleaning for him in his home atop a large mountain in Llewdor. From this vantage point, and with the help of a telescope, the seemingly all-knowing wizard watches the countryside, the shoreline and vast ocean to the east and an endless desert to the west.

Manannan takes a series of absences and Gwydion seizes his chance to escape. He breaks in to the wizard's laboratory and reads Manannan's book of spells, then goes out in to Llewdor to collect ingredients for them. After solving many puzzles to obtain the spell ingredients Gwydion turns Manannan into a cat and is free. His journey then takes him across the ocean to Daventry to rescue a beautiful princess from a dangerous three-headed dragon. It is eventually revealed that he is the son of King Graham, kidnapped from Daventry by the magician at a young age, and the princess he has rescued is his sister, Rosella.

The actions taken by Gwydion in this story lead directly to the events that begin King's Quest V.