As the Iron Horse journeys ever deeper into its mysterious post-apocalyptic world, the crew encounters a lone knight on a quest to slay a dragon. They mock him at first, but when they arrive at the fog-shrouded city known as Stormwatch, the streets are abandoned, the doors are locked, and the citizens are terrified to leave their homes. One old woman, alone and seemingly insane, confronts the crew with this ominous warning: "Beware the dragon's breath!"

They hear the knight's words echoed in her statement, and begin to realize that things may not be as they appear. Then, as night closes in, strange things begin to happen aboard the Iron Horse. Crew members are attacked by invisible beings and strange, mutated creatures. One by one, they begin to vanish. When it seems things can't get any worse, they realize their adventure has only just begun... and that maybe, just maybe, dragons really do exist.