Following the events of The Hostile Hospital, Violet, Klaus and Sunny Baudelaire arrive at Caligari Carnival in the trunk of Count Olaf and his theatre troupe's car, unknown to them.

Olaf and his associates speak of seeking Madame Lulu, a mysterious fortune-teller and owner of Caligari Carnival, for answers of the whereabouts of the Snicket files, which apparently contains crucial information on V.F.D.

Shortly after Violet works on fixing the carnival's roller coaster to use to travel to the Mortmain Mountains, the Baudelaires are forced to participate in the lion show.

After it becomes apparent they can't continue the roller coaster plan, Olaf, (after burning down the majority of the carnival) invites them to join on a quest to the Mortmain Mountains.

However, Olaf reveals that Lulu told him that they were the Baudelaires in disguise, and takes Sunny while the newly recruited freaks cut the rope connecting the car and caravan on a steep cliff, leaving the book on a literal cliffhanger.