Baabwaa and William are friends, and together they decide to have an adventure of their own. After meeting a fierce wolf in sheep's wool they form an unusual friendship with the wolf, teaching him to read and knit. They also lose a little weight. Baabwaa is a sheep who loves to knit. Wooliam is a sheep who loves to read. It sounds a bit boring, but they like it. Then, quite unexpectedly, a third sheep shows up. A funny-looking sheep who wears a tattered wool coat and has long, dreadfully decaying teeth. Wooliam, being well-read, recognizes their new acquaintance: the Wolf in Sheep's Clothing! The wolf is so flattered to discover his literary reputation precedes him that he stops trying to eat Baabwaa and Wooliam. And a discovery by Wooliam turns the encounter into an unexpected friendship where the wolf learns to read!