The novel takes place in the fantastical kingdom of Glome, situated in a world that also includes a country called the Greeklands, modeled after ancient Greece. The narrator is Orual, a princess who eventually becomes the Queen of Glome when her father, the King, dies. In her old age, Orual writes Part I to lay out all of the wrongs that the gods have done to her, hoping that a traveler will bring the book to the Greeklands, where she thinks their people’s wisdom might find some answer to her questions about the gods. The gods most central to the story are Ungit, a goddess who corresponds to Aphrodite, the Greek goddess of love, but in Glome is represented by a rugged black stone and is essentially cruel; and her son, the god of the Grey Mountain, who lives on a mountain near Glome.
Orual’s mother dies when she and her sister Redival are children. Their father, the King, buys a Greek slave whom he nicknames the Fox and assigns to teach Orual and Redival. Orual comes to love the Fox more than anyone. He teaches her Greek myths and philosophy, and he insists on rational thinking, even doubting the existence of the gods.
Before long, the King announces his engagement to the princess of a nearby kingdom. When he makes the girls wear veils for the wedding, Orual realizes that she is ugly. The new queen soon dies in childbirth. The King falls into a rage on the night of the birth, for the baby is a girl, and he needs a son to be his heir. He orders the Fox to work in the mines, but soon realizes that he needs the Fox to advise him in affairs of state instead.
The baby is named Istra, which translates to Psyche in Greek, and her beauty stuns all around her. Orual and the Fox love her deeply, and Orual takes on the duty of raising her. Orual, Psyche, and the Fox all become close and constantly spend time together. This is the happiest time of Orual’s life. But when Redival is caught kissing a guard, the King forces Orual and the Fox to keep constant watch over her, which ruins Orual’s happiness. One day, Redival sees a woman ask Psyche to kiss her baby to make it beautiful, and she threatens to tell the Priest of Ungit about the incident, because people seem inclined to worship Psyche like a goddess.
Glome begins to struggle. The harvests are bad, the King has to put down a rebellion, and a fever spreads through the city. The Fox falls ill, but Psyche nurses him back to health. When the people hear of this, they come to the palace in a mob, demanding that she heal them. She walks through the crowd, touching each person as they kiss the very ground she walks on. The next day, she falls ill herself, but recovers. The people leave offerings for her, and Orual fears Ungit’s wrath.
One day, Redival tells Orual that she has seen Psyche in the city alone, and the people are now saying that she caused the fever instead of curing it. When Psyche returns, she tells Psyche that people called her the Accursed and threw stones at her. Conditions in the kingdom continue to worsen, and the King is desperate.
The Priest of Ungit comes to the palace to talk to the King. Orual fears him. He says that Ungit only becomes angry when people act badly, and when those people are punished, all will be well. To fix the kingdom’s problems, they must find the cause of Ungit’s anger and sacrifice them. The King and the Fox argue against him. The Priest says that a holy divination process has told him that the Accursed is not among the commoners, the Elders, or the nobles. The King thinks the Priest will say that he’s the Accursed, so he threatens to kill the Priest and his guards. Finally, the Priest reveals that Psyche must be sacrificed. Orual and the Fox beg the King not to let it happen, but he refuses to listen.
Orual goes to visit Psyche where she has been imprisoned. She finds Psyche surprisingly calm and resigned to her fate. Psyche has always dreamed about a palace on the Grey Mountain, and she feels that she has been unconsciously preparing to be given to the gods there. Orual is angry that Psyche doesn’t seem to mind their parting as much as Orual does. She doubts Psyche’s love for her, and they part bitterly.
Orual intends to attend Psyche’s sacrifice, but instead she falls into a delirium that lasts for days. When she wakes, she finds that all of Glome’s problems have ended. Orual and the Fox think it’s a coincidence. Orual decides she must go to the Mountain to bury whatever’s left of Psyche. While she’s wandering the palace in her grief, the captain of the guard, Bardia, convinces her to let him teach her swordsmanship as a distraction.
Eventually, Bardia agrees to go to the Mountain with Orual. They discover Psyche, alive, in a beautiful valley. Both sisters are overjoyed to see each other, and Psyche tells Orual what happened to her. She was given a drug to keep her calm, so it wasn’t until she was left alone, chained to the Holy Tree, that she began to despair. But then the god of the wind appeared, lifted her out of her chains, and brought her to an incredible palace in the valley. Every night, she says, the god of the Mountain comes to lie with her, but she is forbidden to see his face. It becomes clear that Orual can’t see the palace.
Orual and Psyche fight over whether the palace is real or a figment of Psyche’s imagination. Orual feels very far away from Psyche, and begins to hate the god and Psyche’s situation. She wants Psyche to run away with her, but Psyche insists that she owes her duty to her husband now. They part. Near dawn, Orual walks to the river’s edge and sees a brief glimpse of the palace, but she hardly believes her own vision.
On the ride home, Orual tells Bardia Psyche’s story and asks his advice. He believes in the religious explanation—Psyche’s sacrifice saved Glome, and she’s now the god’s wife. Back in the palace, Orual tells the Fox what happened. He thinks that a runaway criminal living on the Mountain has fooled Psyche and is taking advantage of her. Orual asks the gods to send her a sign so she can know what’s true, but nothing happens.
Orual decides that no matter what, something awful has control of Psyche. She returns to Psyche’s valley the next day and coerces Psyche into lighting a lamp to look at her husband’s face when he comes to her at night. Psyche at first refuses to betray her husband, but Orual stabs herself in the arm and threatens to kill Psyche and then herself. Psyche begins to almost hate Orual, but she can’t have her commit suicide, so she agrees to the plan. Later that night, Orual sees the light of Psyche’s lamp being revealed across the river. Suddenly a huge storm destroys the valley, and the god appears to her, sending Psyche into exile.
Orual decides to wear a veil for the rest of her life to hide her ugliness. That winter, the King breaks his leg and is taken ill. The Priest is also dying. Orual begins to act as Queen and makes an alliance with the Priest’s successor, Arnom. That night, she discovers Trunia, Prince of Phars, hiding in the garden. He’s been driven out of Phars because of a war with his brother for the succession, and Orual agrees to help him.
Orual proposes a duel for Trunia’s life between herself and his brother, Argan. As preparations for the duel commence, Orual frees the Fox from slavery before realizing he might leave her to return to Greece, which is the last thing she wants. Eventually he decides to stay in Glome. Orual kills Argan. Trunia becomes King of Phars, and they have a strong alliance. Meanwhile, Orual has fallen in love with Bardia, who’s married.
Orual is very successful as Queen and makes many positive changes in Glome. She uses her work to distract herself from her sorrows, and she buries her old self deep inside her, letting her persona as Queen take over. Even so, repeatedly thinks she hears Psyche crying outside, though she knows it’s only chains creaking in the well. The Fox and Bardia act as excellent advisors, though the Fox eventually dies. The Queen finds her life monotonous and decides to travel to other kingdoms.
One day on her travels, Queen Orual comes upon a small temple in the woods. The priest there tells her the temple is for the goddess Istra, and the sacred story of the goddess corresponds almost exactly to Orual and Psyche’s own story. In the priest of Istra’s version, however, both of Istra’s sisters can see her palace, and they conspire to get her away from the god because of their jealousy. The Queen is furious at the way the gods have twisted her story to put her at fault, so she decides she must write down the truth.
Part II is written some time after Orual finishes Part I. Redival’s old lover comes to the palace, and the Queen learns that Redival was lonely in her childhood after Orual began to spend all her time with Psyche. Bardia dies unexpectedly and the Queen goes to visit his wife, Ansit, who accuses her of working him to death. In fact, she says, the Queen has consumed the lives of everyone around her.
Soon, the Queen must take part in a ritual at the house of Ungit. She sees a vivid face in the uncut stone, covered in blood, which supposedly is Ungit. Later, she has a dream that her father forces her to look in a mirror. Without her veil, she sees that her face is that of Ungit. That night she goes to the river, intending to drown herself, but a god’s voice tells her not to jump, because she must “die before she dies.”
Orual tries to mend her soul, but finds it impossible. She has a vision that she has to gather wool from giant sheep, but they trample her. Then she has one that she’s walking through the desert in search of water from the land of the dead. An eagle then brings her to a giant courtroom filled with ghosts, where she must read her complaint against the gods. However, the scroll she reads instead exposes her own jealousy of the gods and possessiveness of Psyche. She sees herself truly for the first time and realizes that the gods don’t interact with humans because humans don’t even understand themselves.
Orual meets the Fox in his ghost form, and he brings her to a series of paintings that show the tasks Psyche has had to complete as Ungit’s punishment. He explains that Psyche did her penance without distress, because Orual took on all of her pain. Finally, he leads Orual to a beautiful courtyard, where Psyche meets her upon returning from her last task. Orual sees that Psyche has become a goddess, and they are reconciled. Then the god comes to judge Orual, who is terrified and ecstatic. She hears him say that she has become Psyche, but when she looks up, the vision ends. She dies soon after, knowing that the god is the answer to everything.