The film is based on the fairy tale of the same name originally published by Wilhelm Hauff in 1826.
Stung by the ridicule of the wealthier inhabitants of the village and desiring to marry the beautiful Lisbeth, he sees his only chance for prosperity in appealing to a good forest spirit, the small Glasmännlein, who grants him two wishes at first, then a third wish later.
Unable to marry Lisbeth due to his being pursued by creditors, Peter locates a dark forest spirit, Holländer-Michel, to make more wishes for wealth.
Peter agrees and becomes a ruthlessly successful businessman but at the cost of Lisbeth and his happiness.
The film is one of the most successful DEFA pictures of all time, and sold 9,779,526 tickets in East Germany.