The events of The God of Small Things are revealed in a fragmentary manner, mostly jumping back and forth between scenes in 1969 and 1993, with backstory scattered throughout. The story centers around the wealthy, land-owning, Syrian Christian Ipe family of Ayemenem, a town in Kerala, India. Most of the plot occurs in 1969, focusing on the seven-year-old twins Estha and Rahel, who live with their mother Ammu, their grandmother Mammachi, their uncle Chacko, and their great-aunt Baby Kochamma.
In the backstory before 1969, Mammachi was married to Pappachi, an Imperial Entomologist who beat her cruelly. By 1969 Pappachi is dead and Mammachi is blind. Behind her house is the Meenachal River and her pickle factory, Paradise Pickles & Preserves. Baby Kochamma is a bitter, jealous old woman who unrequitedly loved an Irish missionary. Chacko went to Oxford and married Margaret Kochamma, an English woman. They had a daughter, Sophie Mol, and then Margaret left Chacko for a man named Joe. Chacko returned to Ayemenem and took over the pickle factory. Ammu married Baba, trying to escape Ayemenem, but Baba turned out to be an abusive alcoholic. After the twins were born the two separated and Ammu moved back to Ayemenem. In the wider society of Kerala, the Communist Party is gaining power and threatens to overthrow landlords like the Ipes. The Ipes live near an Untouchable (an inferior caste) family that includes Velutha, a young man who works for Chacko and is beloved by the twins.
The main action centers around Sophie Mol’s visit to Ayemenem. Joe dies in an accident, and Chacko invites Margaret Kochamma to Ayemenem for the holidays. Estha, Rahel, Ammu, Chacko, and Baby Kochamma make a trip to the airport, and on the way their car is trapped by a Communist march. The family then goes to see The Sound of Music, and Estha is molested by the Orangedrink Lemondrink Man, a vendor at the theater. The next day Sophie and Margaret arrive, and the family returns to Ayemenem.
Estha fears that the Orangedrink Man will come for him, so he and Rahel find a boat and row across the river to the “History House,” the abandoned home of an Englishman who “went native.” The twins set up a hideout there. Meanwhile Ammu dreams about Velutha, and that night she and Velutha meet by the river and have sex. They continue to meet every night for the next two weeks.
Finally Vellya Paapen (Velutha’s father) comes to Mammachi and confesses his son’s relationship with Ammu. Mammachi and Baby Kochamma lock Ammu in her room, where she screams that the twins are “millstones” around her neck. The twins decide to run away to the History House, and Sophie Mol comes with them. Their boat tips over as they cross the river and Sophie Mol drowns. The twins reach shore and, terrified, fall asleep in the History House, unaware that Velutha is there too.
Baby Kochamma goes to the police, telling Inspector Thomas Mathew that Velutha tried to rape Ammu and kidnapped the children. Six policemen find Velutha and beat him brutally in front of Estha and Rahel. When Mathew finds out that Velutha is innocent, he threatens to charge Baby Kochamma. Terrified for herself, she convinces Estha to “save Ammu” by telling the police that Velutha killed Sophie Mol. Velutha dies in jail that night. After Sophie Mol’s funeral Baby Kochamma convinces Chacko to throw Ammu out of the house, and Ammu is then forced to “return” Estha to Baba.
The twins are separated for twenty-three years, during which Estha stops speaking altogether. When he is thirty-one Baba “re-returns” him to Ayemenem. Meanwhile Rahel is kicked out of many schools, and Ammu dies when Rahel is eleven. Rahel marries an American and lives in Boston, but then gets divorced and returns to Ayemenem when she hears Estha is there.
The twins are reunited in 1993. Mammachi has died and Baby Kochamma and the cook, Kochu Maria, spend all day watching TV as the house falls apart. The History House has become a five-star hotel. Rahel and Estha (who still doesn’t speak) sift through some old trinkets and notebooks and end up reaffirming their closeness by having sex.