The kelpie is a supernatural shape-shifting water horse from Celtic folklore that is believed to haunt the rivers and lochs of Scotland and Ireland.
Kelpies are very malevolent in nature. They are known to drown their human victims, who would never be seen again. The heart and liver (it is the heart and lungs in other versions) are the only traces left of those the Kelpie has killed.
The kelpie sometimes appeared as a rough hairy man who would grip and crush travellers, but it most commonly took the form of a beautiful tame horse standing by a stream or river.
In Orkney a similar creature was called the Nuggle, and in Shetland a similar creature was called the Shoopiltee. It also appears in Scandinavian folklore where it is known by the name Bäckahästen, the brook horse.
If anyone mounted it, it would charge into the deepest part of the water, submerging and taking the rider with it. They would sometimes interbreed with humans' horses, and the foals were said to be fine fleetfooted horses. The kelpie was also said to warn of forthcoming storms by wailing and howling. Rarely, kelpies could be benign. The folktale The Kelpie's Wife tells of one in Loch Garve, Ross-shire, who had a human wife. The Jethro Tull song Kelpie, from the 1988album 20 Years Of Jethro Tull, tells of a young woman tempted away by a kelpie. 
According to the Swedish people naturalist and author Bengt Sjögren (1980), the present day belief in lake monsters in for example Loch Ness, is associated with the old legends of kelpies. Sjögren claims that the accounts of lake-monsters have changed during history. Older reports often talk about horse-like appearances, but more modern reports often have more reptile and dinosaur-like-appearances, and Bengt Sjögren concludes that the legends of kelpies evolved into the present day legends of lake-monsters where the monsters "changed the appearance" to a more "realistic" and "modern" version since the discovery of dinosaurs and giant aquatic reptiles from the horse-like water-kelpie to a dinosaur-like reptile, often a plesiosaur.
Sjögren, Bengt, Berömda vidunder, Settern, 1980, ISBN 91-7586-023-6