Frodo wakes in a strange bed, feeling much better. Gandalf, who has been sitting with Frodo, explains that he had been imprisoned, but refuses to elaborate until Frodo is fully recovered. Gandalf also identifies the Black Riders as the Nazgûl, or Ringwraiths. Although not destroyed by the flood, they have been crippled. Frodo reunites with his companions, and he soon discovers that Bilbo lives in Elrond's house. Bilbo asks to see the Ring, but before Frodo's eyes, the old hobbit seems to transform into a nasty, greedy creature. Frodo hides the Ring away, and the moment passes.
The following day, Elrond calls a Council to decide what should be done about the Ring. First they review its history, from its forging to its loss in the Great River Anduin. Boromir, son of the Steward of Gondor, recounts his dream of Isildur's Bane, which he now learns is the Ring, and Aragorn reveals himself as Isildur's heir, the rightful king of Gondor. After Bilbo and Frodo recount their own experiences with the Ring, Gandalf rises to fill in the gap between the Ring's loss and its reappearance in Bilbo's possession. He explains how Gollum found the Ring, and that when he finally emerged to search for it, he found his way to Mordor, where he revealed the Ring's new bearer to Sauron. The Enemy immediately dispatched the Nine to search for it. Meanwhile, Gandalf went to consult Saruman the White, who attempted to convince Gandalf to ally with the Enemy, waiting patiently to overthrow him and take his place. Saruman then imprisoned Gandalf when he refused, who escaped with the help of the eagles. This betrayal shocks many, as Saruman had been their strongest ally.
Although Boromir wants to use the Ring as a weapon, Gandalf and Elrond know that the Ring will corrupt anyone who uses it. Even if Sauron were destroyed, the new wielder of the Ring would become as evil, if not more so, and the threat would remain. The only choice is to send a small group secretly into Mordor, to cast the Ring back into the fires of Mount Doom where it was forged. They hope Sauron will not expect this, nor will he notice a handful of people when whole armies are moving. Although terribly afraid, Frodo volunteers to take the Ring. A company of nine people, to match the Nine Ringwraiths, is selected for the task: Frodo, Gandalf, Aragorn, Boromir, Legolas the elf, Gimli the dwarf, along with Sam, Merry, and Pippin, become the Fellowship of the Ring.
Before they depart, Bilbo gives Frodo his elven sword, Sting, and a mailshirt made of mithril, the lightest and strongest metal in Middle-earth. The elves also reforge Narsil, so that Aragorn can carry the blade against the Enemy. The Fellowship begins the journey southward, but before they reach the mountain, flocks of birds appear scouting the landscape, spies of either Sauron or Saruman. A blizzard that strikes while they are on a mountain path forces them to turn back before the snow buries them or they freeze to death. As they descend, an attack by vicious wargs convinces them that they need to find a more sheltered path. They resolve to traverse the Mines of Moria, which once housed the greatest dwarven civilization but are now overrun by orcs and foul creatures.
The entrance to Moria is nearly blocked by a noxious lake, but the group manages to reach the doors. Gandalf's spells fail to open the doors, until a question from Merry suggests the password. As the group enters, a long tentacle comes up from the water and grabs Frodo by the ankle. He manages to get free, but twenty more tentacles pull the doors down, trapping the party within. Troubled that Frodo was attacked first but otherwise unperturbed, Gandalf takes the lead. When they pause at a crossway, Pippin drops a stone down a well. The sound echoes, and is answered by the noise of hammers. Frodo hears quiet footfalls behind them, and glowing eyes appear watching them when they rest. Still, nothing approaches the party directly before they reach the other side. A shaft of light leads them to the tomb of Balin, one of Gimli's kin who recently sought to reclaim Moria. A record-book found in the tomb reveals that the dwarves were attacked by orcs and slain. As the group prepares to leave, orcs attack the chamber of the tomb. Although they manage to fight them off, a huge orc-chieftain spears Frodo. To everyone's surprise and relief, Bilbo's mailshirt saves his life.
The Fellowship flees to the Bridge of Khazad-Dûm, a narrow span across an abyss and the last obstacle before the main gate. As the party runs across, Gandalf turns to face a new terror that approaches: a Balrog. It is a dreadful spirit of shadow and flame, Durin's Bane, the evil that caused the downfall of Moria. Gandalf holds off the Balrog, and then collapses the bridge to hurl it into the depths. Just as he turns away, the Balrog's flaming whip uncurls and pulls Gandalf down, as well. Weeping, the remainder of the Fellowship flees, escaping from the mines into the light of early afternoon.
In the first half of Fellowship, Frodo and the hobbits have made their way against the odds to the elven haven of Rivendell. Although he has received help along the way from Tom Bombadil and Strider, it is only in Rivendell that Frodo meets the many and varied people of Middle-earth who depend upon the success of the quest he only half understands himself. Elrond, the master of Rivendell, is one of the oldest people in Middle-earth, and his house is a kind of living history lesson. Here, Frodo learns the truth of Strider, of the Ring, of why Gandalf did not meet him in the Shire as they had planned — and he also begins to find his own place in the larger world of Middle-earth. Only he, despite or even because of his insignificance, can destroy the Ring.
The incident with Bilbo and the Ring is significant because it demonstrates that Frodo has fallen under the Ring's spell, although it has not yet gained control of his will. He feels possessive of it, and anyone's desire to touch or look at it arouses discomfort or even anger, whether that person be his beloved Bilbo or Elrond himself. The Ring is subtle, tempting rather than overpowering, and its influence extends beyond its bearer. Twice during the trip to Moria, Frodo is singled out by attackers who have no reason to focus on the hobbit — the Watcher at the gate and the orc-leader both attack an unthreatening member of the company, drawn by the Ring.
The Mines of Moria give a haunting glimpse into the past of the dwarves, the most detailed and suggestive of the many ruins of past civilizations that the travelers encounter on their journey. They also provide an opportunity for Gimli the dwarf to develop as a character. Gandalf's fall to the Balrog also highlights the multiplicity of evil; the Balrog is evil, but it is not a part of Sauron's armies, nor of Saruman's. Although the Fellowship has a particular enemy to fight, and a specific evil to eradicate, embodied in the Ring, there are many other evils in the world. Unfortunately for the quest, one of those evils has been disturbed, and Gandalf sacrifices himself so that the quest may continue.
bane a curse, the cause of destruction.
the Blessed Realm the land to which all the elves may sail, leaving Middle-earth and its troubles; also called the Undying Lands.
brands flaming sticks or torches.
cordial a stimulating drink.
glede a hot coal or ember.
halfling another term for hobbit.
necromancer an evil wizard specializing in death magic.
the Nine the Nazgûl, most powerful servants of Sauron; also refers to the rings of men, which enslaved them.
the Seven the rings of the Dwarves, cursed by Sauron.
the Three the rings of the elves, never touched by Sauron.
warg a large, intelligent, evil wolf.
will-o'-the-wisp a flickering light that leads travelers astray.