Blankets chronicles Craig's adolescence and young adulthood, his childhood relationship with his younger brother, and the conflicts he experiences regarding Christianity and his first love. Though written chronologically, Thompson uses flashbacks as a literary and artistic device in order to parallel young adult experience with past childhood experience. Major literary themes of the work include: first love, child and adult sexuality, spirituality, sibling relationships, and coming of age.
Craig begins by describing his relationship with his brother during their childhood in Wisconsin. They have devoutly religious parents. Thompson also depicts a male babysitter sexually abusing both Craig and his younger brother, Phil. Craig suffers harassment from bullies at school and at church. Through his teen years, he continues to find it hard to fit in with his peers, but at Bible camp one winter, he comes to associate with a group of outcast teens which includes a girl named Raina, who develops an interest in Craig. The two become inseparable, and continue their relationship through letters and phone calls. They arrange to spend two weeks together at Raina's home in Michigan's Upper Peninsula.
Craig arrives and meets Raina’s family, which includes her two adopted siblings, Ben and Laura, her older biological sister Julie, and her parents, who are undergoing a divorce. Raina feels responsible for taking care of Ben and Laura, who are mentally handicapped, as well as Julie’s newborn daughter. Despite growing closer during the visit, the two return to their separate lives, but Raina eventually decides to break off the relationship. They maintain a friendship for a time, talking on the phone with diminishing frequency (and increasing inanity). Ultimately, Craig tells Raina that their friendship, too, is over. Craig then destroys everything Raina had ever given to him, and every memento of their relationship, except for the quilt she made. He stores it in the attic of his childhood home, and moves out to start his own life elsewhere. Craig comes to terms with religion and spiritual identity while away from his family, and confides in his brother that he is no longer a Christian, but still believes in God and the teachings of Jesus. He returns to his childhood home after several years, seemingly a different person.