Twelve-year-old Peter Hatcher narrates this story about life with his 5-year-old brother, Farley Drexel Hatcher (known as Fudge). Fudge is an enthusiastic boy, who develops a sudden obsession with money. The family tries to explain the realities of money and even takes a trip to the Bureau of Printing and Engraving in Washington, D.C. Fudge is undaunted and continues to throw fits when he can’t get what he wants.
At the Bureau of Printing and Engraving, the Hatcher family runs into Dad’s long-lost cousin, Howard Hatcher of Honolulu. Howard (Howie) and his pregnant wife have twin daughters, Flora and Fauna, who make up a singing group known as the Heavenly Hatchers. They also have an almost-4-year-old son who, like Fudge, is named Farley Drexel. Fudge calls him Mini. The conservative, home-schooling Howie Hatcher family decides to stay with Peter’s family’s in their small apartment.
Besides his frustration with the cousins and Fudge’s money obsession, Peter is lonely. His best friend, Jimmy, and Jimmy’s dad have moved out of the building to an artist’s loft across town. Jimmy’s mind is full of his own concerns, like his dad’s plans to get remarried.
Fudge’s talking myna bird, Uncle Feather, stops talking. Fudge fears the bird has swallowed a marble. Mini lets the bird out of its cage, and Uncle Feather flies around the house and into a closed window. The family rushes it to the vet. Although it has a broken wing, Uncle Feather begins to talk again.
On Halloween, Fudge, Mini and a neighbor girl get stuck in the elevator of the Hatchers’ building. The Howie Hatchers decide to rent an apartment in the Hatchers’ building for a while. Fudge loses a tooth and expects the tooth fairy to pay him well. Then Mini swallows the tooth. Fudge finds a container of Peter’s old teeth in Mom’s room and considers passing them off as his own for money. Peter convinces him not to breach Mom’s trust and is briefly transported back to a time when he was Fudge’s age.