Nine-year-old Tiffany Aching is tickling the fish in a river near her home when she comes face-to-face with a tiny blue man riding a small makeshift boat. Before she can register the tiny man's warning, he and several other imps row off, and a green-haired creature with sharp teeth appears in the water.
Tiffany hurries to pick up her younger brother, Wentworth, who is playing by the stream. She whisks him away as the creature shoots from the water and tries to grab him. Instead of being scared, the analytical Tiffany returns to her home on a sheep farm to research the creature in her family's book of fairy tales.
She then takes down her mother's cast-iron frying pan, secures some candy in a bag, and then brings her brother back down to the stream. She ties the bag of candy to a rock by the river and calls Wentworth over. Her little brother tries to take the sweets, but the bag is too heavy. Tiffany hides behind a bush until the creature appears, again. Once its head is out of the water, Tiffany whacks it with the frying pan. The creature disappears and Tiffany gives her brother the candy.
As they leave for home, the reader learns that others have been observing them. Small voices from the bush call out that they must tell their leader they've found the hag. Another observer, Miss Perspicacia Tick ‚Äî a witch, seeks to discover more about Tiffany.
She complains to someone, who apparently lives in her hat, that the land they're on, called the Chalk, is draining her magical powers. Miss Tick is pleased when she comes upon a group of traveling teachers. She's seen enough of Tiffany to know the girl will seek answers for the strange occurrences, and she wants to be a part of the group that Tiffany comes to.
After her daily chores, Tiffany does indeed come looking for answers and finds Miss Tick among the other teachers. After figuring out that Miss Tick is a witch (she's dressed all in black, has a funny hat and a talking toad), Tiffany admits that she, too, would like to be a witch. Miss Tick tells her that witches seldom use magic, preferring instead to be extremely observant and to use their intellect to figure out problems logically. She then asks Tiffany why she wants to be a witch.
In response, Tiffany tells the story of Miss Snapperly, an old woman in her town. When the Baron's son went missing the summer before, people assumed a witch had taken him. As Miss Snapperly looked and acted odd, lived alone and had many books, the Baron claimed she was the witch. Her house and books were burned, and the Baron told the villagers to stay away from her. She survived the summer but froze to death in the winter.
Tiffany wants to become a real witch to stop anything like that from happening again. Miss Tick tells her that in order to find a school for witches, Tiffany must climb to the top of a high place, open her eyes, and then open them again. She also warns the girl that a magical invasion is about to take place. Unbeknownst to Tiffany, Miss Tick leaves her toad behind to help the girl while Miss Tick searches for aid elsewhere.
As Tiffany lies in bed that night, she hears voices. When she calls out to them, they're silent. She drifts in and out of sleep, waking several times to the disembodied voices and the sounds of someone sneaking around in the dollhouse in her room. She decides to look in the fairy-tale book to see if she can find any stories about the little blue men she saw by the stream.
The book only has a picture of one. She hears the same voices coming from the fields and goes outside to investigate. One of her family's sheep is suddenly lifted up and carried away by unseen hands. Tiffany goes outside and tries to stop it from happening, but the thieves move too quickly, and the hens in the chicken coop begin clucking loudly.
She looks under a hen to discover two little blue men with wild red hair trying to steal an egg. When questioned, they claim they thought the egg was a stone. As they put it back, they discuss how one shouldn't cross an Aching and besides, Tiffany is the hag. She senses there are more of the tiny men watching her, so she stands outside and repeats words she heard her Granny Aching say in the past: There will be a reckoning if the sheep is not returned.
The blue men help Tiffany with her morning chores of fetching water and churning butter before they bring back the sheep. They move too fast for her to see them, so she doesn't know what they are. She decides to seek Miss Tick, but on the way up the road, the ground around her becomes covered in snow and a headless horseman chases her. One of the blue men appears and tells her to stare the horseman in the eyes he hasn't got. The horse pauses as Tiffany stares it down, and the blue men swarm on it, causing it to stumble. The horse and headless man disappear, leaving Tiffany in a field no longer covered with snow but green grass and little blue men. The men run off before she can question them.
Tiffany finds the toad Miss Tick left behind. He tells her the blue men are Nac Mac Feegles, but they call themselves the Wee Free Men. Tiffany demands that the toad tell her what's going on. He admits another world is invading Tiffany's, and all the monsters are returning because there is no one to stop them.
Tiffany and the toad return to her home. Her parents arrive home from sheep shearing. They are frantic because Wentworth is missing. Tiffany searches the house for her brother but doesn't find him. The Nac Mac Feegles have disappeared as well. The toad tells her that they wouldn't have stolen her brother, but they probably know who did. He advises that she use liquor to bribe them to come out, which she does in the privacy of the barn. The Wee Free Men admit to stealing the sheep and eggs and helping Tiffany with her chores, but they fear that the Queen of fairies has stolen Wentworth.
When Tiffany demands to learn their names, the Feegles cry out in fear. The toad explains that they think words have power, especially written words (they're especially afraid of lawyers and all their talk). They are shocked that Granny Aching didn't tell Tiffany more about the magic world and the Queen that wants to take over their world. Tiffany remembers much of what her Granny said and did over the years and realizes that she's been taught things without realizing it.
The Wee Free Men say their kelda, or female leader, has asked them to find the kin of Granny Aching and bring her back to help them fight the Queen. Tiffany agrees, knowing it may be the only way to rescue Wentworth. Before following them to their lair, Tiffany grabs liquor, a cast-iron frying pan and her Granny's book of sheep ailments. The Feegles watch in awe as she writes a note to her parents and explains that she's searching for Wentworth.
The Feegles carry Tiffany to the chalk mound where her Granny Aching is buried. There they wait for another Feegle named Hamish to appear. He drops from a buzzard and tells them that he saw the Queen carrying a boy to "the other side." Rob Anybody, the Feegles leader, explains that the other side is filled with nightmares. Fierce dogs sent by the Queen attack the group, but the Feegles and Tiffany manage to fight them off.
Tiffany learns that Granny Aching knew of the Nac Mac Feegles and would give them an occasional sheep as thanks for keeping the herd safe from predators. She also learns that they take the tobacco packets the farmers leave at Granny's grave.
The Feegles take Tiffany to their kelda, a large and ailing female Feegle. The kelda recognizes that Tiffany has the First Sight and the Second Thoughts. The kelda knows that that the Queen is taking care of Wentworth, but she doesn't know how to love, which is what the boy needs. The kelda makes Tiffany her successor, at least until the Queen is banished and another kelda can be found from a distant land. When the kelda dies, the Feegles fret, not only because they must accept Tiffany as their new leader, but also because one of the Wee Free Men must marry her.
Tiffany uses her logic to get out of the predicament. She selects Rob Anybody as her husband but says the wedding won't take place until a bird has worn away a granite rock, a mile high. Rob Anybody is thrilled with the arrangement, as are all the Wee Free Men.
The search for Wentworth begins in a stone circle on one of the chalk mounds. At first Tiffany orders one of the Feegles to show her the door to the other world. He won't be bullied. Frustrated, Tiffany opens her book of sheep remedies and begins reading, knowing that the Feegles think she's reciting magical spells. As she relaxes, she spots a gummy bear out of the corner of her eye. As Wentworth always has candy with him, she knows she's found his trail. She steps through a stone arch and enters the Queen's wintery world.
Tiffany and the Feegles are set upon by a pack of the Queen's dogs, but this time instead of fighting them, William, an older Feegle, plays his set of mousepipes (similar to bagpipes.) The dogs become dazed and run away. As the Feegles carry her through the land, Tiffany realizes that the scenery becomes more real as she gets close to it, as if the Queen is using Tiffany's thoughts to create what she sees around her. Rob Anybody tells her that time passes slower in the Queen's world. When she becomes bored with Wentworth, she may send him back to Tiffany's world, but he would still be a toddler while most of his family would be old or dead. Tiffany is filled with fear, but instead of running away, she runs toward the forest, ready to fight whatever may come at her.
And then she wakes up. Disappointed to think that everything had been a dream, Tiffany searches through the house and barn for the Nac Mac Feegles, but they are nowhere to be found. She enters the kitchen where her mother is making porridge and sits down to eat a bowl. Suddenly, a china shepherdess on a shelf begins to vibrate, and then the oven door starts shaking. Tiffany pauses before taking a bite of porridge and realizes that her mother's hand isn't a hand, more of a gray blob. The Feegles burst from the walls, floor and oven to warn her not to eat the porridge. Her mother turns into a giant figure, similar to a gray gingerbread man, and it stalks toward her. Tiffany screams and this time, truly wakes up.
The Feegles explain that the Queen has creatures called dromes that enter people's minds and cause them to fall asleep. If you eat anything in a drome's dream, you will remain in it forever. The drome likes to watch people's dreams until the people starve to death. The drome then eats them. The Feegles are able to sneak into the dreams because they have the ability to sneak into anything.
Tiffany and the Nac Mac Feegles battle an army of fairies. At first it seems like the fairies will carry off the Wee Free Men, but one of the Feegles recites poetry. The fairies freeze in flight then buzz off to the forest in fear. Tiffany realizes that in this Fairyland, words have awesome power. She also remembers that she is more real than anything else in the land, so she is stronger.
As they continue searching for Wentworth, they come across a boy riding a horse. Tiffany recognizes the boy as the Baron's son, Roland, who disappeared the previous year. Before she can convince him that she can get him out of Fairyland, she enters the dream of another drome. This time she is at a beautiful masked ball. A huge table, piled high with food, draws her near. She is able to resist eating it until she spies an array of cheese, her weakness. As she starts to slice a piece, a drop of cold water falls on her hand. She looks up to see that the swan ice sculpture has changed into a copy of the china shepherdess in her house. Tiffany understands that she's in a dream and changes the cheese knife she holds into a sword. She races toward Roland as the Nac Mac Feegles appear in tiny tuxedos. They run about trying to find the drome. Tiffany realizes that the Roland in her dream is actually the drome and cuts of its head.
When Tiffany awakes, she tries again to tell Roland that she can get him out of Fairyland after she rescues her brother. He doesn't believe her. He warns her that this place captures you in dreams within dreams. Even the Nac Mac Feegles appear to be caught, unable to free themselves from the dream about the masked ball.
Tiffany continues on her own until she comes across four dromes in chains. She realizes she must enter their dreams in order to find the Queen and her brother. The new dream is filled with pictures from her fairy-tale book. Roland enters the dream and tells her how he followed the Queen into Fairyland. He's been taken care of and fed candy and sugarplums. He's seen how the inhabitants of Fairyland open magical doorways to other worlds in order to take food from them. Roland warns Tiffany not to make the Queen angry. She can stare at people and turn them into horrible things. Or else she sends large bumblebee women to carry them off and leave them for the dromes to eat. He won't follow Tiffany when she insists she must find Wentworth.
Tiffany finally hears her brothers whining for sweets. Tiffany snatches him from a pile of candy, but the Queen appears. The Queen tries to make Tiffany doubt that she loves her brother. She's only rescuing him because she's selfish. She sees Wentworth as a possession, not a brother to love. Tiffany realizes the Queen she sees is only an illusion trying to make her doubt her strength. Tiffany manages to strike the Queen with her frying pan and run away with Wentworth. As the bumblebee women chase them, they find Roland. He wants to come with her, but warns her that she is running toward the Queen. Tiffany doesn't believe him but soon finds herself in the Queen's presence, again.
As the Queen threatens to kill her, Tiffany hears the voices of the Nac Mac Feegles coming from a large nut someone in the dream is trying to crack. Tiffany tells Roland to crack the nut as she faces the Queen. When he does, the horde of Wee Free Men rush out to save their kelda from the Queen. They manage to free Tiffany, Wentworth and an unconscious Roland, and start back toward the magical door. Before they can find it, the Queen sends a horde of nightmarish creatures to torment them. Tiffany uses a drome to flee into a safer dream. She uses the picture on her Granny Aching's Jolly Sailor tobacco packet to conjure a dream of a being out on a rowboat with an island and a lighthouse in the distance. Because Tiffany had often pictured a giant whale when she daydreamed about the sea, a giant white whale appears and chases them. Tiffany orders the Feegles to row toward the lighthouse. She knows that since this is her dream, they will be safe once they get to it. They reach the island, and all seems well until the tide goes out. Wentworth and the Feegles explore the sunken treasure they can see in the distance while Tiffany tries to figure out the best way to get home. When the Queen causes the ocean to rush back into the shore, Tiffany realizes they've been tricked. She's unable to save the Nac Mac Feegles or her brother, but she is able to grab Roland and return to the stone circle back in her own world.
When she wakes from the dream, the Queen appears to torment Tiffany with the loss of her brother and the Feegles. The Queen claims that all witches, including Tiffany, are selfish. That's why Tiffany let Wentworth die. Frost is forming all over the chalk mounds, and Tiffany can no longer think clearly. Her world will be taken over by the Queen. Tiffany falls to the ground in defeat, but she is mentally transported into the chalk as if passing through millions of years. She feels as if she has become one with the earth. She understands that someone has always fought for the people and the land of Chalk. As she returns to the present, she turns the Queen's argument back on her. As a witch, Tiffany is selfish; she will take responsibility for all the people and things of her world and fight to protect them. She stands up and shrieks at the storm the Queen has conjured to destroy her. As she does, the ground beside her is struck twice by lightening and two dogs form. They are Lightning and Thunder, her Granny Aching's dogs, who disappeared when she died. The dogs herd the storm away at Tiffany's command. But Tiffany knows that the dogs only take commands from her Granny. She turns to see the image of Granny Aching, wearing the costume of the china shepherdess figurine, smiling at her from the mist. With a nod of her head in recognition of Tiffany's good work, Granny Aching and the dogs disappear.
The Queen, however, is still a danger. But as she threatens Tiffany again, the Nac Mac Feegles arrive with Wentworth in tow. They tell Tiffany that they will defeat the Queen, but the Queen sends their most feared foe after them. Three lawyers appear from out of the thin air and begin to read a list of charges against the Feegles. They tremble in terror at the words the men speak. The Queen seems to have incapacitated them until a voice calls out from Tiffany's pocket. It is Miss Tick's toad. He begins to spout lawyerly talk back at the three men, defending the rights of the Feegles. The toad remembers that he was once a human being, a lawyer, who'd filed a lawsuit against a fairy godmother, who turned him into a toad as retribution. The Queen waves her hand and makes everyone but Tiffany disappear. Tiffany calls on the strength of who she is, of what she has learned over the years from Granny Aching, and the fact that she is a real person, to defeat the Queen. She sends the Queen back through the magic doorway.
A moment later, Rob Anybody kicks Tiffany's leg and asks where she'd gone. Tiffany explains that she sent the Queen back to the other side, but Rob worries that the Queen will come back again one day. The Nac Mac Feegles run off to spend the treasure they stole from the ships in the dream before it disappears. Tiffany has Roland bring Wentworth back to her parents. She remains on the mound, reliving the events of the past few days and convincing herself they were real.
Miss Tick arrives with two other witches. They are surprised to learn that Tiffany no longer needs their help. Tiffany understands that there is no actual witches' school, but that all of life is an education. They tell her that eventually she will learn magic, but for now, she should concentrate on learning a trade, as there's no money to be made in being a witch. A witch's true job is to protect the borders between worlds; she does this for no money, although people often give the witches small rewards. Tiffany remembers how people often brought Granny Aching tobacco.
As her father races up the mound, the witches tell her that when she's older, she'll live with a witch, doing light housework and cleaning in exchange for lessons on magic. They leave her one last gift, an invisible pointy witch's hat. No one else can see it, but she'll know it's there.
Tiffany settles back into her old life. Roland has taken credit for saving her and Wentworth from the magical world, and Tiffany doesn't refute his claim. Four days after they return, Roland visits her. He apologizes for not telling the truth. Tiffany forgives him and tells him that when he becomes the Baron of the land, she expects him to be fair and just to people. She tells him that she'll be watching him.
When Roland reacts with arrogance, she tells a bucket to fill itself with water. The Nac Mac Feegles fill the bucket so quickly that it appears to have been filled by magic. She orders Roland to leave before the Feegles do him harm.
Once he's gone, she gives the Wee Free Men her permission to select a new kelda. Tiffany goes back to making butter pats and enjoying her life. She looks forward to the time when she will learn more about being a witch.