Darby O'Gill (Albert Sharpe) is the aging caretaker of Lord Fitzpatrick's (Walter Fitzgerald) estate in the small Irish town of Rathcullen, where he lives in the gatehouse with his lovely, almost grown, daughter Katie (Janet Munro). Darby spends most of his time in the town pub, regaling his friends with tales of his attempts to catch the leprechauns, in particular, their king, Brian Connors (Jimmy O'Dea).
Darby is past his prime as a laborer, so Lord Fitzpatrick decides to retire him on half pay and give him and Katie another cottage to live in, rent-free, and give his job to a young Dubliner named Michael McBride (Sean Connery). Darby begs Michael not to tell Katie that he is being replaced, to which Michael reluctantly agrees. That very night, Darby is captured by the leprechauns while chasing his runaway horse Cleopatra (revealed to be a Pooka), on top of the fairy mountain Knocknasheega. Darby learns that King Brian has brought him into the mountain so he could avoid the shameful admission to Katie about losing his job. However, this would mean that Darby would not be allowed to return to Rathcullen and must remain with the leprechauns permanently.
However, Darby tricks the leprechauns into embarking on a fox hunt by playing a rousing fiddle tune called "The Fox Chase" for them on a Stradivarius violin, loaned to him by King Brian. The leprechauns leave on horseback through a large crack in the mountainside wall, from which Darby also escapes. Expecting Brian to track him down once realizing he escaped, Darby tricks the leprechaun into a drinking game to trap him at sunrise (when the leprechaun's powers no longer have any effect) and he uses his first wish to have Brian remain at his side for two weeks or until he makes his two wishes. Meanwhile, despite a rocky beginning between them, Katie believing Michael is merely seasonal help, the two begin to show signs of growing affection. Brian stirs the two more in the direction after tricking Darby into making his second wish, warning Darby that his kin might resort to targeting Katie to get him back. Later, the town bully Pony Sugrue (Kieron Moore), who has his eyes on both Katie and the caretaker job, learns of Michael's position and attempts to get him fired with his meddlesome mother Sheila (Estelle Winwood) revealing the truth to Katie.
A livid Katie, after lashing out at her father and Michael with the intent to leave early, chases Cleopatra to Knocknasheega at nightfall. By the time Darby finds his daughter, Katie is gravely injured with a fever as a banshee appears. Despite Darby getting Katie back to Rathcullen while attempting to drive the apparition away, the banshee summons the cóiste-bodhar to carry Katie's soul off to the land of the dead. Desperate, Darby elects to use his final wish to go in his daughter's place, which a saddened King Brian reluctantly grants. But while accompanying Darby on his way to the next world, King Brian tricks Darby into making a fourth wish ("wishing" that his friend could join him in the afterlife). Because he is only allowed three wishes, this negates all the previous wishes (except, somehow, the wish that the coach come for him instead of Katie) and spares Darby's life. Darby is saved and King Brian has (literally) the last laugh in their running battle of wits.
Katie's fever lifts and she and Michael reveal their love for each other. Michael later confronts Pony at the pub for his attempt to get him fired knocking him out and making him appear an incompetent drunk. Finally, Darby and Michael depart arm-in-arm, joining Katie outside in the wagon for a happy ending, with Michael and Katie singing a final duet together of "Pretty Irish Girl."
The film's development began with a visit to Ireland and the Irish Folklore Commission by Walt Disney and associates in 1947. The Disney company continued to liaise with the commission and its director, James Delargy, over the coming decade based on Disney's desire to use Irish folklore as the basis of a film but, to Delargy's disappointment, eventually decided to make an adaptation of Irish-American writer Hermione Templeton Kavanagh's 1903 collection of stories 'Darbie O'Gill and the Good People.'
The duet "Pretty Irish Girl", apparently sung by Sean Connery and Janet Munro, has been alleged to feature dubbed vocals by Irish singers, Brendan O'Dowda and Ruby Murray. A single of the duet was released in the UK. However, the deeper male vocal and breathy female vocal (which matches Munro’s a capella finish to the song, plainly recorded on set) performing the song in the American version of the film do not match the voices of O'Dowda (a tenor) nor Murray (a trained singer.)
Connery does sing the song Pretty Irish Girl (with solo piano accompaniment) on the 1992 compilation The Music of Disney: A Legacy of Song, and in 1959 Top Rank released a single in the UK (catalog number JAR 163) which featured Connery and Munro singing the song.
On the film's initial release, A. H. Weiler of The New York Times praised the cast (save Connery whom he described as "merely tall, dark, and handsome") and thought the film an "overpoweringly charming concoction of standard Gaelic tall stories, fantasy and romance."
Film critic and historian Leonard Maltin in his book The Disney Films, states, "Darby O'Gill and the Little People is not only one of Disney's best films, but is certainly one of the best fantasies ever put on film." Maltin rates the movie so highly that in a later article he included it among a list of lesser known outstanding Disney films.Dell Four Color #1024 (August 1959)