First we learn of Stuart's birth to a family in New York City and how the family adapts, socially and structurally, to having such a small son. He has an adventure in which he gets caught in a window-blind while exercising; Snowbell, the family cat, then places Stuart's hat and cane outside a rat hole, panicking the family. He was accidentally released by his brother George. Then two chapters describe Stuart's participation in a model sailboat race in Central Park. A bird named Margalo is adopted by the Little family, and Stuart protects her from Snowbell, their malevolent cat. The bird repays his kindness by saving Stuart when he is trapped in a garbage can and shipped out for disposal at sea.
Margalo flees when she is warned that one of Snowbell's friends intends to eat her, and Stuart strikes out to find her. A friendly dentist, who is also the owner of the boat Stuart had raced in Central Park, gives him use of a gasoline-powered model car, and Stuart departs to see the country. He works for a while as a substitute teacher and comes to the town of Ames Crossing, where he meets a girl named Harriet Ames who is no taller than he is. They go on one date, and then Stuart leaves town. As the book ends, he has not yet found Margalo, but feels confident he will do so.