Canto IV opens with Kaupa in Rome. He is seduced by the wealth and power he sees, doubts the old gods, and decides to embrace Christianity and convert the Latvians. Back in Latvia, the people labour long building a walled city for the Germans, who are now present in large numbers-Riga. Once they have their fortress the Germans begin to plunder everything they can get their hands on, to pillage and to destroy. Full of bitterness, the Latvians realize that they have been tricked.
Meanwhile, in Germany Laimdota is being held captive in a convent. Spidala had tricked her into leaving her father's castle back in Latvia by pretending to be her mother. Laimdota was then seized by Spidala's minions, brought to Riga, and placed on the ship to Germany as a prisoner. During the journey Dietrich tries to calm her and tells her that she will soon be the Bride of Christ. Laimdota replies that she loves Bearslayer, will not be forced to become anyone else's bride and is, in any case, a mortal and not fit to become the bride of Christ. Although hardened and without pangs of conscience, Dietrich blushes at her virtuous answer, and leaves her. Kaupa refuses to help her on the grounds that it is the will of Destiny that she go to Germany. Soon both Dietrich and Kaupa forget about her.
The convent prioress tries to persuade Laimdota to accept Christianity and threatens to allow her to be seized by a local count and used as a concubine. To escape this fate Laimdota pretends to accept Christianity but, despite this, one night armed men break into the convent and seize her. As they are about to carry her off an unknown warrior appears and fights all the kidnappers on his own. He kills all except one, and rescues Laimdota. She recognizes him as Koknesis and they flee into the mountains. Along the way Koknesis explains how he too was tricked into going on the ship to Germany. Once in Germany, he heard that a Baltic woman was being held in the convent and decided to rescue her, without knowing that it was Laimdota.
The action turns to the Northern Sea, where Bearslayer is wandering in a ship, lost on the way to Germany to seek Laimdota. The North Wind's Daughter hears the sailors calling upon her in song, and she comes to them in her own ship. She says that it would be best if they came to her island to rest, before continuing their journey, and Bearslayer agrees. They avoid the Castle of the North Wind, where he is sleeping, perhaps for another month. Once he is awake, the winter will set in and they will not be able to escape because of the ice and storms.
The island is warmed by fires from the centre of the Earth, and the sailors enjoy a pleasant stay. Eventually the North Wind's Daughter tells them that her father is about to wake up and that they must leave. She warns them not to return by the route that they came by, because Bearslayer's enemies now know that he is using that route and may be too strong for him. She describes an alternative route, but warns of its great dangers, including the land of the dog-snout ogres, the Kingdom of Dreams, the Hill of Diamonds, and the Enchanted Isle. The sailors set off in the nick of time: The North Wind has woken up and they are involved in a fearsome storm, from which they barely escape.
They reach the island of the Dog-Snout Ogres, where they tie up. Bearslayer goes ashore with a party of men to cut up and share the meat of some deer he has already killed. They are at work when suddenly the Dog-Snouts pour out of a cave and attack them. They tear the men apart with their teeth and even Bearslayer is scarcely able to save himself. He is wounded and seems doomed, until he notices that no more Dog-Snouts are coming out of their cave. He slips in to the cave and is able to defend himself with his spear in its narrow opening. The Dog-Snouts then bring up large boulders and block the entrance, trapping Bearslayer inside.
Back at the ship the sailors wait in vain for their comrades. Their orders forbid them to go ashore and search for them. At the last moment Bearslayer appears and tells them to disembark at once. They do so, and escape the Land of the Dog-Snouts. At sea Bearslayer explains what happened. He got out of the cave by digging a hole at the rear with his spear. This took several days, but he found some raw meat in the cave, and lived on that. The Dog-Snouts were busy watching the front of the cave, and thus did not see Bearslayer as he escaped at the rear.
They sail away, and reach the Kingdom of Dreams. This is where Heaven and Earth come together, the gates of Paradise standing alongside the entrance to Hell. This land is the location of the Gardens of the Sun, where the Sun returns at dusk and rests at night before setting off each morning. Under the protection of the Sons of the Gods and the Daughters of the Sun they stay in the pleasant Kingdom of Dreams for some time, but eventually set off again.
They travel in pitch darkness at first, but later see a tiny glint of light, towards which they sail. They come closer and sight the Hill of Diamonds, its peak glowing brilliantly. The ship docks and the sailors rush on shore. Despite Bearslayer's warning, a sailor climbs to the peak and vanishes. A second does the same. A third ties himself to a rope and is pulled back by his comrades as he is vanishing. He is saved, but never speaks again.
They sail away and encounter fair winds and weather. Fog obscures the course and they suddenly emerge close to a beautiful island. Bearslayer realizes that this is the Enchanted Isle the North Wind's Daughter warned against, from which no ship can escape. They try to sail away but are drawn to the island until the ship runs up on its shore.