Muggles' Guide to Harry Potter/Magic/Kelpie

Overview
The Kelpie is a form of water creature that resides in rivers and streams only. It is native to Scotland, though there are similar Irish myths, which give them other names. The Kelpie has the shape of a fish-tailed horse in the water, but can assume the shape of a horse, or a handsome man, on dry land.

Extended Description
When appearing as a man, there will often be something to give away the Kelpie's true nature, such as pond weed in his hair, or horses hooves. Often confused with the Each-Uisge, which takes on the same forms in and out of the water, the major difference is that the Each-Uisge lives in lochs and the sea, not rivers and streams as the Kelpie does, and is usually associated with more terrifying myths than those of the Kelpie.

The Loch Ness monster is neither, as there are no ancient legends of her ever appearing as a horse. Nessie is always described as a serpent, right up until recent times, when American film makers latched onto the terms "kelpie" and "each-uisge" and "water-horse". Real Scottish legends say that Nessie was a beautiful Celtic maiden who was turned into a terrible serpent by a hag called The Cailleach because she left the cover off a spring and the water poured down all day, filling up the valley below, forming Loch Ness. They say this is how the loch got its name, and is the reason why Scots always refer to Nessie as "She". The reason for the assumption that Nessie can shapeshift into an otter comes from the maiden's name, Neasa, meaning "otter" in old Gaelic.

It is mentioned in Fantastic Beasts and Where to Find Them that one of the Kelpie's favoured shapes is a sea horse, often with bulrushes instead of a mane, as described above. According to the author, "Newt Scamander", the largest Kelpie on record is found in Loch Ness, which is in Scotland. The International Confederation of Wizards noticed that it wasn't a serpent when it changed into an otter. As mentioned above, this is possibly an indication that Rowling's perceptions of the Kelpie have been skewed by American film-makers.

Though mentioned in passing in the main books, the Kelpie plays little, if any, part in the story.