The Shadow Isle — Katharine Kerr

The wild Northlands hold many secrets, among them the mysterious island of Haen Marn, the mountain settlements of Dwarveholt, and the fortified city of Cerr Cawnen. All three communities-and the alliance of humans, elves, and dwarves-are threatened by the religious fanaticism of the Horsekin. Only the magic of Dallandra and Valandario and the might of the powerful dragons, Arzosah and Rori, can save the Northlands from conquest.