Picking up from City of Ashes, City of Glass begins a few days after Clary and Jace's awkward break-up. With the permission of the Clave and Alicante, Magnus Bane creates a portal to send the Lightwoods, Jace, Clary and Madeleine to Alicante. Desperate to keep Clary safe, Jace lures Simon to the Institute and asks him to lie to the Lightwoods about Clary not wanting to go to Idris. Simon refuses, but their argument over the issue is interrupted when the Institute is attacked by Forsaken. During the attack Madeleine is killed. Simon is seriously injured, which leaves Jace with no choice but to bring him through the portal as well or risk the Forsaken killing him.
Clary arrives at the Institute to find it deserted. Magnus explains to her what has happened. Using her powers Clary creates a portal. Luke attempts to stop her, but instead both are dragged through to Idris. Since none will enter the city who are not authorized, they are thrown outside of the city into the surrounding fields, mountains blocking their path to Alicante. They land in a strange lake with odd reflective powers. Luke explains that they landed in Lake Lyn, which is the very lake that Raziel emerged from with the Mortal Cup and Sword, offering the instruments to Jonathon Shadowhunter (the first of the Shadowhunters). Lake Lyn has been cursed for all Shadowhunters since; the water is incredibly toxic and, if ingested, causes intense hallucinations and fever that could be followed by madness.
They travel to Alicante, passing through one of the Shadowhunter's graveyards where Clary has a vision of her own grave and Luke realizes the effects of the lake water have taken over. Luke and Clary use a hidden alley and slip into the city, only for her to collapse into a heap. Luke carries her to the home of a Shadowhunter known as Amatis whom we later learn is Luke's sister. Amatis nurses Clary back to health and she remains behind with Amatis in the city while the others are introduced to Aline Penhallow and her cousin Sebastian Verlac. Some members of the Clave want Simon to lie and say that he, along with the Lightwood family, are Valentine's spies, but Simon refuses, which leads to his imprisonment.
Clary sneaks away from Luke's sister's house to find the others, only to find Jace and Aline kissing each other. Jace yells harshly at Clary to drive her away and cause her to return home. Clary leaves, heartbroken, and Sebastian offers to take her home where she finds an angry Amatis waiting for her. Clary sorts things out with Amatis, and Sebastian, later, helps her with her plan to save her mother. The two go to Ragnor Fell's house the next day, where Clary is shocked to discover that Ragnor has been killed and that Magnus was there in his place. Magnus freezes Sebastian and informs Clary that she must gain a spellbook in the Wayland country home in order to save her mother. After unfreezing Sebastian, Clary and Sebastian leave and travel to the ruins of Fairchild manor, where she and Sebastian share a kiss that she breaks due to it not feeling right. She thinks about Jace throughout the whole kiss. Sebastian informs Clary that Simon is in jail.
Clary returns to Amatis's house where Jace is waiting for her. He apologizes to her for his harsh words, only for the two to fight once again about him not telling her about Simon being in jail. After they calm down, they travel through a portal Clary made in Amatis's kitchen to the Wayland manor and get the spell book only to discover the remains of an experiment Valentine had been running on a half-dead angel. They then learn through the angel that Jace has demon blood. Jace, after the angel shows them these visions, pulls out a dagger and hands it to the angel. The angel kills himself. The two barely make it out of the house alive when it begins to explode and, while lying on the ground, share a brief moment of passionate romance. Clary stops the two of them when things begin to go too far, accusing Jace of using her so he can hate himself when he says he blames his demon blood for his incestuous feelings for her. The two return to Alicante and find it in flames. Meanwhile, Isabelle just saves Aline from being grabbed by a demon and Aline then runs off. Alec goes after her only to find Magnus, where they resolve their relationship. Clary gives the spellbook to Magnus so he can wake up her mother.
Jace, Clary, and Alec leave to break Simon out of the jail where he is kept. They break out both Simon and Simon's cellmate, Samuel, only to discover that Samuel is actually Hodge. He informs them that the mirror, the last of the Mortal Instruments, is actually the Lake Lyn. Hodge is then killed by Sebastian, who claims that he did it to keep them out of danger. This causes the four to realize that Sebastian is a spy for Valentine and he flees after a difficult battle with them. They return to the Hall, only to discover that Sebastian has killed Max. After Max's funeral, Jace sneaks into Clary's bedroom and tells her he loves her and always will. The two then fall asleep holding hands. The following morning, Jace leaves a note behind and sneaks off to find Sebastian.
Clary manages to convince the Clave to fight with the Downworlders and teaches them a binding rune that the dying angel showed her. Alec and Magnus share an alliance, and Alec kisses him in front of the huge crowd of Downworlders and Shadowhunters revealing his sexuality to his parents and the Clave. It is during this time that Clary discovers, after talking with her mother (who had finally awoken from the spell that Magnus used from the spell book) that she had received angel’s blood while in the womb and that Jace is actually the son of Stephen Herondale, son of the last Inquisitor, and had also received angel's blood while he was in his mother's womb. This means that Jace and Clary are not siblings and Jace does not have demon blood, but rather more angel's blood, and further reveals that Sebastian is actually Clary's brother. Clary then marks Simon with the Mark of Cain, a powerful protection spell, with the intent of saving him from Raphael, who says that vampires will only fight with Shadowhunters against Valentine if they give him Simon. The exchange causes the vampires to fight with the Clave. Meanwhile, Jace finds Sebastian talking to Valentine, who intends to use Lake Lyn to summon Raziel to destroy all the Shadowhunters that have not drunk from the Mortal Cup. After Valentine leaves, Jace battles Sebastian, who informs him of the actual familial bonds that Jocelyn told Clary. The battle between the two ultimately ends up with Jace defeating Sebastian with a stab through the back, piercing his heart.
Clary portals to Lake Lyn to stop Valentine from summoning Raziel, but he uses a special rune to paralyze her body and voice. He then reveals to her his intent of using her as a sacrifice. When Jace arrives to rescue her, Valentine uses Jace's blood for the sacrifice by stabbing him in the chest and successfully summons Raziel. However, Raziel sees through Valentine's schemes and kills him. When Raziel offers to grant Clary one wish, Clary asks for Jace back.
At the celebration after Alicante has been saved, Clary sees a woman dressed in white talking to Magnus (who is later revealed to be Tessa Gray) and the Seelie Queen asks Clary for a favor but she turns the Queen down stating she has everything she wants. She then returns to Jace, her family, and the rest of her friends to enjoy the fireworks display.