Sir Mordred the Valorous – "the Living Sword of Arthur" – is triumphantly processing into Camelot after a successful campaign against the Vikings. Up in a balcony, the Trio indulges in some hero worship during this magnificent display of the kingdom's elite armed forces. But their awe towards the proceedings is tempered by regret over failing to deliver King Olaf's peace offering in time. Arn swears to Rowanne that he and Valiant will somehow fulfill the vow they swore to Thor before he died. This talk of Thor and Camelot's unidentified traitor is overheard by the king's older half-sister Lady Morgana, who invites Prince Valiant to attend her at Mordred's victory banquet (much to Rowanne's annoyance). During the banquet, Morgana informs Sir Mordred of Valiant's encounter with the remnants of a slaughtered Viking peace delegation. The haughty knight immediately dismisses this as preposterous and proclaims that warfare in general will always be necessary for the preservation of peace.
This speech greatly disturbs the prince, as does Mordred's crest of an axe below the Rising Sun of Camelot. Merlin notices Valiant's discomfort and takes him to a fantastic underground haven (by way of a complicated entrance mechanism) in order to help him remember where he last saw the emblem. Using a whirlpool to put Valiant into a trance-like state, Merlin guides Valiant back to his time in Thor's caves until the prince remembers seeing Mordred's shield among the dead Vikings. The prince is horrified when he realizes that Camelot's champion is actually a murderer, yet he still braves King Arthur's wrath by voicing his suspicions to him. But King Arthur will not tolerate the mere notion of Mordred's betrayal and angrily dismisses Valiant while Lady Morgana watches unnoticed. Valiant then tries to confide his suspicions to Rowanne, but she also doesn't believe him and warns him that there will be terrible consequences if he's proven wrong.
Later, Prince Valiant interrupts Sir Mordred and Sir Bryant's friendly combat training and asks for a private word with Mordred. Bryant leaves with Gawain as Valiant takes up the staff for a physical and verbal sparring match – his indirect accusations hit Mordred close to home and prompt the seasoned knight to quickly end the match before storming off to Lady Morgana's tower. It seems that Morgana seduced Sir Mordred into slaughtering the peace delegation so that the war with the Vikings could continue. Mordred's concerns over Valiant's suspicions are just as strong as his concerns over what use Morgana will make of the duplicate key she now possesses to the strong box holding Arthur's papers of state. Lady Morgana assures her former lover that Valiant won't be a problem – she later summons the prince to her chambers and attempts to poison him with one of her concoctions. Fortunately, Merlin has been spying on Morgana using mirrors and sends his falcon to knock the poisoned drink out of Valiant's hands. Realizing that her old rival is on to her, Morgana blackmails Mordred into murdering Prince Valiant, therefore making Mordred see the danger this vile serpent poses to his beloved Camelot.
Lady Morgana arranges for Prince Valiant to accompany Sir Mordred to Watford on a bogus mission of mercy. After they leave, she seeks out her brother to inform him of a threat to the young prince only to learn that Merlin has already dispatched the king after them. Mordred and Valiant seek refuge from a storm at Satan's Rock, where Valiant directly accuses Mordred of being a traitor to everything Camelot stands for. Mordred is so outraged that he fights, disarms, and nearly kills the prince before his sense of honor and guilt for his sins stops him. This last minute act of mercy is witnessed by Arthur, who overhead everything and now knows how far from grace his dear friend has fallen. The king allows Mordred's public reputation to remain untainted but sends him on a mission that will forever banish him from the kingdom he loves.