Chapter 3: Danger at Dunwater

Following the events of the Sinister Secret of Saltmarsh, the Saltmarsh City Council hires the Monster Squad to search the area around the mouth of the Dunwater river to determine to whom the smugglers were meeting.
Accompanied by their Sea Elf friend Oceanus, the Monster Squad discover the Dunwater Lizardfolk Lair led by Queen Othokent and her senior advisor Sauriv.  Rather than preparing to attack Saltmarsh, as the council had feared, they are actually creating an alliance of aquatic races to defend against the Sahuagin Threat.  The Sahuagin have driven the Lizardfolk from their previous colony, and have been actively harassing the other aquatic races in Firedrake Bay including the Koalinth, the Sea Elves, the Locathah, and the Merfolk.  There is also a Sea Elf named Skirttl attempting to join the alliance on behalf of the Sea Elf city of Myth Tarkir.
Othokent had decided not to include land-dwellers in the alliance negotiations due to their perceived irrelevance in what would be a primarily aquatic war.  The Sea Elves were likewise excluded because of the mutual racial hatred between them and the Koalinth.  After conferring with the council and raising that it has been the Sahuagin, and not random pirate attacks, that are behind the recent disappearnces of ships, the Monster Squad make the case that they should be included as well as Oceanus' home of Myth Mannan.  Othokent agreed to invite both to the alliance upon the completion of two tasks:  The retrieval of a lost heirloom from the Bullywug king Gulpa'Gor, and the killing of a massive crocodile named Thousand Teeth.  The Monster Squad complete both these tasks (and kill a young black dragon besides, discovering a lost gate belonging to the Twisted Rune, and are welcomed into the Dunwater Alliance to the disgust of the Koalinth who abandon the alliance.
A great feast is held to celebrate the alliance, but in a night that comes to be known as The Night of Blood and Water , Skirttl attempts to assassinate Queen Othokent and kills a number of her guards, while simultaneously the Sahuagin attack the Lavinia's Folly and the Dunwater Lair.  The Monster Squad is able to save the queen and defend their ship, which is attacked by strange mutant Sahuagin who have been greatly modified.  Skirttl is revealed to be a Sahuagin Malenti - a sort of mutant spy that appears similar to Sea Elves, and was here to ensure the alliance failed.  Skirttl dies from some sort of psychic attack before he can reveal any further information.  Oceanus discovers that the entire city of Myth Tarkir has been slaughtered.

Parent Plot

Act 1: Those Who Have Lost Their Way