Walking home from school with her sister, Susi notices what appears to be a furry mat discarded in a rubbish skip outside the village hall. Passing by, she feels strangely drawn towards it, as if by a magnet, so she goes over to investigate. The 'furry mat' turns out to be a filthy worn-out teddy bear, or a "Teddy Blair" as Susi exclaims in surprise. Unable to resist the bear's sad imploring face, she takes it home. Not long afterwards, they meet a strange woman in the street. She tells them they have found a very rare and special bear, but it must be taken to the toy hospital for repairs before it's too late. This they do. When collecting the bear, the family are in for a surprise. The toy hospital is now a magical place and their patient has become a real live bear, able to talk and behave just like themselves. They bring him home and Teddy Blair turns out to be a loveable and huggable member of the family who gets into many scrapes and awkward situations.