Source : Webster's Revised Unabridged Dictionary (1913)

Kelpie \Kel"pie\, Kelpy \Kel"py\, n.; pl. {Kelpies}. [Cf. Gael.
   cailpeach, calpach, colpach, a heifer, steer, colt, colpa a
   cow or horse.] (Scotch Myth.)
   An imaginary spirit of the waters, horselike in form,
   vulgarly believed to warn, by preternatural noises and
   lights, those who are to be drowned. --Jamieson.

Source : WordNet®

kelpie
     n 1: (Scottish folklore) water spirit in the form of a horse that
          likes to drown its riders [syn: {kelpy}]
     2: an Australian sheepdog with pointed ears