As a child, Gimpel became known for being easy to fool, which is why his neighbors in Frampol call him “Gimpel the Fool.” He works at the local bakery, and his customers and all of the villagers are constantly playing tricks on him, such as telling him that the Messiah has come. In such cases, Gimpel seldom completely believes those tricking him, but he figures that it might be possible and so who is he to judge. Gimpel finds the constant mockery tiresome and considers moving elsewhere, but just as he is about to leave, his fellow-villagers start encouraging him to marry a local woman, Elka, whom they swear would be an excellent match. She is a sharp-tongued, irritable woman rumored to have had many lovers and a bastard son (whom she claims is her younger brother), but, eventually, after much urging, Gimpel is persuaded to marry her.
He is greatly disturbed when, four months later, she gives birth to a son whom, Gimpel realizes, another man must have fathered. But Elka, along with all of Gimpel’s neighbors in Frampol, insist that the baby is simply premature. After a while, Gimpel accepts her story and the child as his own. He grows to love his wife and baby, and is more or less content with his lot until one day, he comes home from work early and finds Elka sleeping with another man. When Gimpel informs the village rabbi, he is told he must divorce her and cease to see her or their child. While apart from them, Gimpel thinks about how, when first confronted with the accusations, Elka repeatedly denied them. He becomes horrified by the idea that he might have imagined the man in her bed; shortly after, he returns to the rabbi to tell him he must have been mistaken and that he would like to go back to living with his wife.
The rabbi explains that Gimpel’s new version of the story will need to be discussed by a group of rabbis. While he is waiting for them to deliberate, Gimpel befriends an apprentice at the bakery. After nine months, the council of rabbis concludes that if Gimpel is really certain that he had hallucinated Elka’s adultery, he may resume his life with her. Overjoyed, Gimpel returns home, but, to his horror, he finds her in bed with his friend, the apprentice. Elka, on awakening, tells Gimpel to go and check on their goat; when he comes back, the apprentice is gone, and in response to Gimpel’s accusations, Elka tells him he has lost his mind. The next day, the apprentice also questions Gimpel’s sanity. Confused, not wanting to be in the wrong, Gimpel decides to forget the whole thing. He lives happily for twenty years with Elka, becoming a wealthy baker and the father of several children, until Elka suddenly gets very sick. On her deathbed, she confesses that she lied to Gimpel throughout their marriage, that she had several affairs, and that none of the children are really Gimpel’s. Gimpel feels deeply betrayed.
One day, a short time later, The Spirit of Evil comes to Gimpel in a dream and persuades him to get revenge on his neighbors in Frampol for their years of deceiving him by urinating in the bread he sells. Under the Spirit’s influence, he does urinate in some bread dough and bakes it. But then he has another vision, this time of the dead Elka, who reproaches him for trying to do evil to his neighbors and persuades him that he will not get his place in Paradise if he does not do the right thing this time. When he wakes up, Gimpel buries the bread he was going to use to trick the townspeople. Then he packs his things and leaves the town of Frampol forever. For years, Gimpel wanders Eastern Europe, becoming an itinerant traveling storyteller in the process. Good people support him as he travels, and he comes to believe that there’s no such thing as a lie: that anything not happening now will either happen one day or in someone’s dreams. He frequently dreams of Elka and looks forward to an afterlife where he can be reunited with her and where there is no such thing as deception.