A dragon and phoenix live on opposites sides of a magic river. One day they meet on an island and discover a shiny pebble. The dragon washes it and the phoenix polishes it until it becomes a pearl. Its brilliant light attracts the attention of the Queen of Heaven and that night she sends a guard to steal it while the dragon and phoenix are sleeping.

The next morning, the dragon and phoenix search everywhere and eventually see their pearl shining in the sky. They fly up to retrieve it, but the pearl falls down and becomes a lake on the ground below. The dragon and the phoenix lie down beside the lake, and are still there today in the guise of Dragon Mountain and Phoenix Mountain.

The story is based on The Bright Pearl, a Chinese folk tale. Chinese dragons are typically depicted without wings (although they are able to fly), and are associated with wisdom and water. Chinese Phoenixes are immortal, and they do not need to die and then be reborn. They are associated with loyalty and honesty. The dragon and phoenix are often linked to the male yin and female yang qualities.