Franklin Lassiter, finds quartz crystals that look like diamonds and puts them in his pouch. A short time later he's wounded in the Battle of Oriskany, NY. He's found by Oneida warriors and taken to a small valley where he's shown a lake inhabited by strange creatures. Lassiter promises the Oneida never to divulge what he has seen. In time he becomes a wealthy farmer, but legend has it that he knows where a diamond mine exists. Three men look for the diamond mine, but meet with death and disaster.

One hundred fifty years later, twelve-year-old David reads of an incident in 1875 involving an unknown lake. He convinces his friends, Alex and Adam, and his sister, Ellie, to help hm find the lake. They take a canoe on Half Moon Lake and are carried into a narrow river to another lake that they call Hidden Lake. The kids explore the area and soon look for a way out, but the dense forest and glacial melt debris prevents their exit.

When they see a strange animal exiting the water, the nervous adventurers again try harder to make their way home and an encounter with a mother bear leaves them shaken. Ellie soon discovers a clearing and a large pond with prospectors' tools and old bones strewn all over the ground. Alex discovers an opening in the back of a small cave, which leads them into Skeleton Cave near their homes. The kids agree not to tell anyone about their adventure until they have positive proof of their discovery.

The adventurers return to the prospector's campsite where Ellie and Alex are soon threatened by the beast. The boys realize that the animal only goes after something that moves, so they use this knowledge to distract it. Once she's safe, Ellie suggests that a photograph is good evidence of the beast's existence and David agrees to use a phone camera after they rest awhile. Alex hears something and warns the others that the beast is approaching. David drops his phone when he runs for shelter, but returns and sees the phone lying under the sleeping beast's foot. He attempts to retrieve it, but the beast awakens, and a wild, heart throbbing chase begins. David escapes and snaps a few pictures. The group returns home once again, but David didn't get a photo because the camera's lens was soiled. Dr. Hoffman, a geologist, looks at the items the group collected. He identifies the beast in David's drawing and asks to take the material with him for further studies. Ellie shows the boys something that she picked up at Hidden Lake and the boys are now sure that they have positive proof of their discovery.