The Wolf Among Us is set in the year 1986, nearly twenty years before the events of Fables. For years, many of the magical lands described in myth, legend, and folklore (known as The Homelands) have been occupied by an enigmatic tyrant known as the Adversary. To escape the Adversary's totalitarian regime, many of The Homelands inhabitants fled to colonial America, and created an enclave known as Fabletown, now located in modern-day Manhattan. To mask their presence from the native humans, all non-human fables have to purchase an enchantment known as a "glamour" which allows them to appear human, or be relocated to a rural community known as "The Farm".
The protagonist of The Wolf Among Us is Bigby Wolf (Adam Harrington), formerly the Big Bad Wolf. He is the sheriff of Fabletown, currently working at the "Business Office" under corrupt interim mayor Ichabod Crane (Roger L. Jackson), aided by Snow White (Erin Yvette) and the Magic Mirror (Gavin Hammon) in his investigation along with the help of Bufkin the winged monkey (Chuck Kourouklis) that manages Fabletown's records. Aristocrat Bluebeard (Dave Fennoy) also works at the Office though his motives are unclear. Bigby resides at the Woodlands apartments where Colin (Brian Sommer), one of the Three Little Pigs, occasionally crashes at his place. Beauty and the Beast (Melissa Hutchison and Gavin Hammon) are also residents of the Woodlands, though currently struggling with a troubled marriage. One of the Fables that Bigby frequently contacts is Mr. Toad (Chuck Kourouklis) and his son TJ (Toad Jr.), who live in a run-down apartment building nearby.
In the first episode, the player is introduced to The Woodsman (Adam Harrington), who lives in the same building as Mr. Toad. Standing in Bigby's way are Dee and Dum Tweedle (Gavin Hammon), twin private investigators and criminals. Bigby also encounters Holly (Janet Lipsey), a Troll who runs the Trip Trap bar, and barfly Grendel (Kid Beyond). The second episode introduces trickster and thief Jack Horner (Colin Benoit), Georgie Porgie (Kevin Howarth), a pimp and the owner of the Pudding & Pie strip club, along with prostitute Nerissa (Molly Benson), the former Little Mermaid, Vivian (Sandy Delonga), and Clever Hans (Ben Knoll), the club's bouncer. The third episode introduces the janitor Flycatcher (Dustin Rubin), Bloody Mary (Kathryn Cressida) as a minion of the Crooked Man (Philip Banks), and Aunty Greenleaf (Laura Bailey), a rogue witch who illegally sells cheap black-market glamours to Fables. The fourth episode introduces the Jersey Devil (Bobby Vickers), the manager of the Lucky Pawn shop and Johann the butcher (Terry McGovern), the former owner of the Cut Above butcher shop who has been forced out of his business by the Crooked Man's henchmen.
This is a broad overview of the plot. Certain decisions made by the player will alter details of specific events.
Bigby Wolf, formerly the Big Bad Wolf, is the Sheriff of Fabletown, a hidden community of fairytale characters located in 1980s New York City. Receiving a call from Mr. Toad, Bigby protects a prostitute from an intoxicated Woodsman. Before she departs, she tells him he is not as bad as everyone says he is.
Later that night, Bigby and Snow White find the woman's head left on the Woodlands doorstep. Clues left with the head identify her as Faith, a Fable from Allerleirauh. Deputy Mayor Ichabod Crane orders him and Snow to investigate her death. They head to the apartment she shared with her husband Prince Lawrence and find the Tweedles, Dee and Dum, snooping through it. They learn that Lawrence and Faith struggled to make ends meet and Faith took up prostitution to help pay the bills. Bigby leaves Snow at the Woodlands while he continues to trace leads. When he returns, he finds the Woodlands surrounded by police, Snow's head sitting on the building's steps.
Bigby is taken in for questioning by the mundy police, but Crane uses a spell to wipe the incident from the police's minds. When they return, they are surprised to find Snow still alive; the head is shown to be disguised by a black-market glamour, a spell that non-human Fables use, and belongs instead to a troll named Lily. Bigby tracks Lily's connections to the Pudding & Pie, a strip club run by Georgie Porgie, but Georgie claims innocence. One of his other prostitutes, Nerissa, cryptically directs Bigby to a nearby hotel room. There he finds Lily's blood on the bed, and photographic evidence of Crane engaging in sexual acts with Lily glamoured to look like Snow. He informs Snow of this, and they race back to the Woodlands to find Crane gone, and the Magic Mirror, which could have revealed his location, shattered with one shard missing.
Bigby follows a trail of clues to Crane's whereabouts to the apartment of Aunty Greenleaf, one of the witches that makes the black-market glamours. Along the way, Bigby discovers that Crane has been embezzling money from Fabletown over the years to pay off a loan shark known as the Crooked Man. Greenleaf points the two back to the Pudding & Pie. Storming the club, they find Crane trying to extract information out of the prostitutes to prove his innocence. Snow realizes Crane's actions are not that of a murderer, and he is arrested for his embezzlement. Leaving the club, they are attacked by the Crooked Man and his henchmen, the Tweedles and Bloody Mary. Mary and the Tweedles goad Bigby into his werewolf form, and a fight breaks out. When Mary critically wounds Bigby with a silver bullet, Snow steps in to stop the fight and willingly gives up Crane to the Crooked Man to save Bigby's life.
Back at the Woodlands, Bigby struggles to find clues when Nerissa appears. He realizes the ribbon she wears prevents her from speaking the truth, that Faith wore an identical ribbon, and that she died when the ribbon was removed. He follows another trail of clues, and finds evidence of the black-market glamour ring in the Cut Above butcher shop, a pawn shop called the Lucky Pawn where the Crooked Man distributes his loans to Fables owned by Jersey Devil, another henchman of the Crooked Man, and Crane's presence, as well as the missing Mirror Shard. The Mirror reveals Mary putting Crane onto an overseas flight to Paris to keep him from talking, as well as the next location of the door to the Crooked Man's lair, which moves around the city.