The Fire Eternal begins five years after Fire Star while David Rain is still missing, presumed dead after the events in the Arctic. Meanwhile, Zanna has started up a small shop for gothic jewelry, crystals, aromatherapy, reflexology, and flower tinctures (anything "new agey", Zanna says), called The Healing Touch. She is also raising her five-year old daughter Alexa (also David's daughter) while living at Wayward Crescent. Everyone in the household seems to accept that David is gone forever, but Lucy refuses to give up the hope that David might still be alive somewhere.
Eventually, Lucy teams up, anonymously and secretly, with Tam Farrell, journalist of The National Endeavor, to find out clues as to what happened to David. First, Lucy tells him to ask for Zanna at the Healing Touch. He does this, buying a dragon and saying it's for his niece. At the same visit to the shop, Tam makes an appointment, falsely saying he has aches. He then asks Zanna out on a date, justifying that he doesn't see a ring on her finger, showing he believes she's not married. She retorts coldly, "I'm already called for." But just as he's about to leave, he decides to ask Zanna to "Cassandra's": a bookshop around the corner. They would be holding a poetry reading soon, and he tells her to come with her partner.
Zanna has a very hard time deciding whether she should go or not; she feels like she could be betraying David. But, after a short talk with Arthur, she decides to go with Henry Bacon.
At the reading, Tam greets Zanna and Henry, asking Zanna quietly if Henry is her partner, but she replies that he's only a friend. Luckily Tam doesn't press further. They all sit down, and listen to some poetry, but Tam surprises Zanna by getting up and reading out some poetry he wrote himself, about love. Zanna can't help but feel moved by the poetry. After the reading, Henry goes to get a poetry book signed and Zanna browses the shelves. A few minutes later, Zanna returns to "rescue Cassandra from Henry", as she puts it, as Henry is conversing with the store owner about his career as a librarian. After she relieves her, Cassandra tells Tam to pick any book in the shop as thanks for his reading, and Tam, eager to impress Zanna, chooses the book "White Fire".
Zanna soon finds out about Lucy and Tam's scheme after learning what Groyne saw while spying on Tam. When Tam goes up for an appointment on the second floor she tells him everything and then brands him with the mark of Oomara in a fit of anger, and Tam then loses his memory of ever meeting the Pennykettles. Lucy was also there and is outraged at Zanna, giving her the cold shoulder. As a result, she later runs away from home and goes to Tam's work place. After he doesn't recongize her, Lucy has Gwendolen inject her memories into Tam. He then remebers everything and the two try to visit David's house in another in Blackburn. After driving through horrible traffic to get to the adress David gave the Pennykettles when he applied to be their tennant, Tam and Lucy were shocked that a house wasn't even at the address-just an empty lot (and little did they know, a portal). While wondering how this could be, Lucy spots a squirrel hopping across the curb. Not being able to help herself, she follows it, and disappears in a mysterious flash of light. Tam immediately contacted Zanna at Wayward Crescent, and a long chain of communication began. After calling Arthur, Zanna tells Tam that Lucy has been taken by something.
The place Lucy is taken to happens to be the folly on Farlowe Island. When she is transported there she meets Brother Bernard and learns that the monks are being terroized/posessed by the Ix (who the Pennykettles thought were Fain). The Ix force Lucy to make a darkling out of obsidian so that they could go north and terrorize the Fain. Lucy cleverly defies them and makes the darkling without a heart, so it cannot live. The bit of obsidian that was left was made into a knife.
During all of these events, the book switches to the adventures of three bears: Ingavar (sometimes David Rain and sometimes Oomara, also the direct son of Thoren), Avrel the Teller (son of Lorel), and Kalair the fighter (son of Ragnar). Ingavar journeys with the two bears to retrieve Gawain's eye, and in the middle of the book you discover that Ingavar is actually David. When he was stabbed by the ice (which is actually Gawain's fire tear), his auma was merged with Ingavar and Oomara, therefore giving him the ability to transform into a hunter and a polar bear.
Back home in Wayward Crescent, Liz takes care of Alexa. The 5-year old in the rock garden meets a crow, belived to be Gwillana, who was sent from the bears in the Arctic, and answers questions from the feathery winged creature. After Gwillana leaves, fairies formed from Guineveres body exit from the fairy door, a knick-knack type thing that Alexa believes is a portal for fairies. They take Gollygosh, G'reth, Groyne, and Gadzooks to David in the North.
Gwilanna then goes and finds Zanna and Gwendolen in a traffic jam. Everybody in the jam is reading David's book White Fire, which seems unusual. Zanna turns into a crow and she and Gwendolen follow Gwilanna to the Pennykettle home.
Meanwhile Lucy suddenly apears, but she is posssesed by an Ix:risor. She cuts Liz on the back with the obsidian knife from Farlowe Island. After this, the Ix in Lucy tries to tell Alexa to contact David. Alexa does this and David hears her, but he is too busy to help her. Suddenly Gwillana, Zanna, and Gwendolen fly in. Zanna and Bonnington draw the Ix out of Lucy and kill it. Gwillana heals Liz with Gawain's isoscle. Unfortunately, Gwillan was watching from a window and thought that Liz was dead, so he shed his fire tear. Gwillana promises to stay at Henry Bacon's house until Liz is healed. But after Liz is healed, Gwillana mannages to get away with the isoscle and the obsidian knife, which has dark fire in it.
At the very end of the book, Liz tells Zanna to take Alexa to the library gardens, not telling that David came to her and told Liz to tell Zanna to do so. Following Liz's advice, Zanna and Alexa are at the Library Gardens when David suddenly appears. There is a great glow in the sky that signals that dragons returned to the Earth. Then the author ends the book with a cliffhanger after Zanna and Alexa see David in the flesh for the first time since he disappeared.