A widow has two rose bushes, one bearing white roses, and the other bearing red blooms. She also has two daughters who resemble the rose bushes so much that she calls one Snow White and the other Rose Red. The two daughters are the most obedient, industrous children, yet differ slightly. Rose Red is more outgoing, and Snow White more gentle.

One winter, they hear a knock on the door. It is a bear, half frozen, who tells them not to fear -- he is cold and only wishes to come in for the warm fire. Every day he leaves to wander the woods, and every night they allow him to shelter with them until spring, when he leaves to protect his treasure from wicked dwarves.

Not long after his departure, the two young women find a dwarf in the woods, his beard caught in a dead tree. Although the dwarf is rude and surly, they free him by cutting off a bit of his beard. He ungratefully stalks off, mourning the loss of the tip of his whiskers. A little later, Snow White and Rose Red continue to find him in similar predicaments: once with his beard caught in a fishing line, and again with his beard caught in the claws of an eagle. Each time, they are forced to snip parts of his beard off. Furious, he begins berating them when suddenly, a bear rushes out of the bushes, and kills him with one stroke. The bear calls out at them not to fear him: he is their bear from last winter. The bearskin suddenly falls off, and instead of a bear, a handsome prince stands before them.

The prince explains how the dwarf stole from him and changed him into a bear, and how since then, he has been trying to catch the dwarf and kill him. The dwarf's death has finally freed him from the spell.

Soon after this, Snow White marries the prince, and Rose Red marries his brother. The widow and her two rose bushes go to live in the castle for many years.