In the Icelandic Volsunga Saga (late 13th century), Fáfnir was a dwarf gifted with a powerful arm and fearless soul. He guarded his father's house of glittering gold and flashing gems. He was the strongest and most aggressive of the three brothers.
Regin recounts to Sigurd how Odin, Loki and Hœnir were traveling when they came across Ótr, who had the likeness of an otter during the day. Loki killed the otter with a stone and the three Æsir skinned their catch. The gods came to Hreidmar’s dwelling that evening and were pleased to show off the otter's skin. Hreidmar and his remaining two sons then seized the gods and held them captive while Loki was made to gather the ransom, which was to stuff the otter’s skin with gold and cover its outside with red gold. Loki fulfilled the task by gathering the cursed gold of Andvari's as well as the ring, Andvaranaut, both of which were told to Loki as items that would bring about the death of whoever possessed them. Fáfnir then killed Hreidmar to get all the gold for himself. He became very ill-natured and greedy, so he went out into the wilderness to keep his fortune, eventually turning into a serpent or dragon (symbol of greed) to guard his treasure. Fáfnir also breathed poison into the land around him so no one would go near him and his treasure, wreaking terror in the hearts of the people.
Regin plotted revenge so that he could get the treasure and sent his foster-son, Sigurd Fåvnesbane, to kill the dragon. Regin instructed Sigurd to dig a pit in which he could lie in wait under the trail Fáfnir used to get to a stream and there plunge his sword, Gram, into Fafnir's heart as he crawls over the pit to the water. Regin then ran away in fear, leaving Sigurd to the task. As Sigurd dug, Odin appeared in the form of an old man with a long beard, advising the warrior to dig more trenches for the blood of Fáfnir to run into, presumably so that Sigurd does not drown in the blood. The earth quaked and the ground nearby shook as Fáfnir crawled to the water. Fáfnir also blew poison into his path as it made his way to the stream. Sigurd, undaunted, stabbed Fáfnir in the left shoulder as he crawled over the ditch he was lying in and succeeded in mortally wounding the dragon. As the great serpent lies there dying, he speaks to Sigurd and asks him what his name is, what his father's and mother's names are, and who sent him to kill such a terrifying dragon. Fafnir figures out that his own brother, Regin, plotted the dragon's death, and tells Sigurd that he is happy that Regin will also cause Sigurd's death. Sigurd tells Fáfnir that he will go back to the dragon's lair and take all his treasure. Fáfnir warns Sigurd that all who possess the gold will be fated to die, but Sigurd replies that all men must one day die, and it is the dream of many men to be wealthy until that dying day, so he will take the gold without fear.
Regin then returned to Sigurd after Fáfnir was slain. Corrupted by greed, Regin planned to kill Sigurd after Sigurd had cooked Fáfnir’s heart for him to eat and take all the treasure for himself. However, Sigurd, having tasted Fáfnir's blood while cooking the heart, gained knowledge of the speech of birds and learned of Regin's impending attack from the Oðinnic (of Odin) birds' discussion and killed Regin by cutting off his head with Gram. Sigurd then ate some of Fáfnir’s heart and kept the remainder, which would later be given to Gudrun after their marriage.
In art and music 
Fafnir appears — as "Fafner" — in Richard Wagner's epic opera cycle Der Ring des Nibelungen (1848-1874), although he began life as a giant rather than a dwarf. In the first opera, Das Rheingold (1869), Fafner and his brother Fasolt win a massive hoard of treasure from Wotan, the king of the gods, in exchange for building the castle Valhalla. The treasure includes the magic helmet Tarnhelm and a magic Ring. As they divide the treasure, Fafner kills Fasolt and takes the Ring for himself. Escaping to earth, he uses the Tarnhelm to transform himself into a dragon and guards the treasure in a cave for many years before being ultimately killed by Wotan's mortal grandson Siegfried, as depicted in the opera of the same name.
The 2007 adaptation of Beowulf mentions Fafnir in passing. King Hrothgar refers to him as the "dragon of the northern moors." The golden drinking horn which Hrothgar claimed as his prize upon slaying Fafnir is central to the plot.
- Byock, Jesse L. (1990), Saga of the Volsungs: The Norse Epic of Sigurd the Dragon Slayer, Berkeley, Los Angeles, London: University of California Press, ISBN 0-520-23285-2.