The protagonist of the film, the Wizard (Oleg Yankovsky), invents a fairy tale to amuse himself and his wife (Irina Kupchenko). The tale's characters come to life, come to his house and set out to live their lives.
Many years ago, the Wizard came up with a "reverse" fairy tale, turning a bear into a human (Aleksandr Abdulov), who would transform back into a bear as soon as a princess falls in love with him and kisses him. Now, the young man returns to the Wizard's house where he meets a beautiful girl (Yevgeniya Simonova), and they immediately fall in love with each other. To his dismay, she turns out to be a princess – the Wizard made it so that a king who was just passing by with his daughter and his suite felt a sudden urge to stop by the estate. When the Princess, clueless about the young man's origin, wants to kiss him, he flees in horror.
The Princess hurries after him, dressed as a boy. They meet in a tavern called "Emilia", but the Bear, unable to recognize the Princess, summons her to a duel. However, when the Princess cries out "Daddy" during the battle, the Bear realizes that she deceived him.
In anger, he goes to the innkeeper and begs to be to locked up, as the tavern is covered with snow and it is impossible to get out. The innkeeper gives him the key to a room. He draws his attention to one of the court ladies and recognizes in her his first love Emily, in whose honor he named the inn. The innkeeper and Emily decide to help the quarreled lovers.
The Princess locks herself in a room on the second floor of the inn and promises to shoot anyone who would come to her. The King orders to draw lots and the lot comes out for the court Minister Administrator (Andrei Mironov). The Administrator comes to the Princess, and a shot rings out – leaving behind the Princess, the administrator shoots her, but misses. The Princess angrily decides to marry the first courter and announces the Administrator to be her fiance.
The King decides to play a wedding. Desperate, his love taken away from him, the Bear decides to tell all about the princess kiss that would turn him into a beast, but the Princess rejects him.
The wedding procession leaves. The Hunter and the Bear remain in the tavern. The Wizard appears and tells the Bear that he was disappointed in his behavior. He calls the Bear a coward. In the opinion of the Wizard the Bear should have kissed the princess. The fact that he didn't do that shows that he does not love the princess so much as to sacrifice his human form. The Bear and the Hunter make an agreement under which, if ever the Bear is to kiss the Princess and to turn into an animal, the Hunter will kill him.
Several years pass by. The country is actually ruled by the Administrator instead of the King. The Princess is slowly dying of longing for the Bear. The Wizard intentionally does not let the Bear in the country and into his house, because he thinks that the tale with a sad end has much more to teach people, and stories with a happy ending are just for children.
As the Princess feels death coming, the Bear appears in the house of the Wizard. The Hunter is aiming the gun at the Bear. The Bear kisses the princess, but does not turn into a bear, and stays a man. The Wizard explains this paradox to be an ordinary miracle.
The characters leave the Wizard's house that turns out to be all scenery. The decorations burn and the Wizard is left alone.Oleg Yankovsky as the Wizard
Irina Kupchenko as the Wizard's wife
Evgeni Leonov as the King
Yevgeniya Simonova as the Princess
Aleksandr Abdulov as the Bear
Andrei Mironov as Minister Administrator
Vsevolod Larionov as the Hunter (singing Mikhail Boyarsky)
Yekaterina Vasilyeva as the First Lady (singing Larisa Dolina)
Yury Solomin as the Innkeeper (singing Leonid Serebrennikov)