Book I, Chapter 2: "The Shadow of the Past" Years pass, as Frodo continues to enjoy the serenity of the Shire and the company of his friends, especially his cousins Peregrin (Pippin) Took and Meriadoc (Merry) Brandybuck. As Frodo nears age fifty, however-the same age at which Bilbo left on his adventure with the Dwarves-he begins to feel restless.

After many years' absence, Gandalf returns to Bag End. He informs Frodo that Bilbo's magic ring is, in fact, the One Ring crafted in secret by the Dark Lord Sauron, ancient and evil enemy of Elves and Men. Sauron infused the Ring with his own power, and his own will to possess others. Sauron is growing again in strength in the Land of Mordor, far to the east, and is seeking the Ring. Should he regain it, he would achieve complete domination of Middle-earth. He already controls the nine Men, kings of days past who had been given their own Rings of Power, for Sauron's Ring is, as its inscription says, the "One Ring to rule them all." These nine Men are now Ringwraiths, living a shadowy existence as Sauron's slaves.

Sauron lost the Ring when an alliance of Elves and Men defeated him at the end of Middle-earth's Second Age, thousands of years previously. Isildur, a hero of Men, cut the Ring from Sauron's hand and kept it for his own. When Isildur was ambushed at the Great River and leapt into its waters, the Ring slipped from his hand. It was later discovered by a Hobbit-like creature named Déagol, who lived on the banks of the River. Déagol's friend Sméagol killed him for the Ring. Because of his crime, Sméagol's people rejected him, giving him a derogatory name based on the noise he made with his throat: Gollum. Gollum was forced into exile, and lived under the Misty Mountains, where, in time, he encountered Bilbo Baggins, to whom he lost the Ring. Eventually, Gollum's desire to regain the Ring led him to leave the Mountains. As he journeyed through the Forest of Mirkwood, Gandalf met him and learned his story from him. Then-to Gandalf's regret-he let Gollum go. He only found Gollum again with the help of "Aragorn, the greatest traveler and huntsman of this age of the world." Gandalf and Aragorn found Gollum after he had left Mordor itself. In Mordor, Gollum was tortured and revealed to Sauron that the One Ring was in the possession of a Baggins living in The Shire.

Alarmed, Frodo tries to destroy the Ring. He finds he cannot. Gandalf tells him the only way to destroy the Ring is to throw it into the fiery Cracks of Doom in Mordor where it was first fashioned. Knowing that he and the Ring cannot remain in the Shire, Frodo resolves to leave. Gandalf assigns him the traveling name of "Mr. Underhill," and also a traveling companion: Frodo's gardener Samwise (Sam) Gamgee-who has been eavesdropping through an open window on the entire conversation.