The Borrowers are introduced as story told to a child called Kate by Mrs May, whose brother had met them as a child. The Borrowers are tiny people who live underneath or behind different pieces of furniture in the house, living by "borrowing" different small items that they use for everyday furniture. The Borrowers in this story are called the Clock family - Pod, Homily and their daughter Arietty, whom they have shielded from the practicalities of borrowing. For her part Arietty would like to experience borrowing and pressures Pod to take her.
Pos returns from one Borrowing trip very worried because in the process of borrowing a tea cup he was Seen. Being seen by a human is the worst imaginable scenario for a Borrower. Pod was seen by a young boy who is the nephew of the owner of the house, an elderly bedridden woman called Aunt Sophy. The Boy lives in India but returned to the old house in England to recover from illness. Seeing Pod climbing down the curtain and seeming to struggle, The Boy takes the cup from him to enable him to climb more easily, giving it back to him once he reaches the bottom. Pod has actually been seen many times by Aunt Sophy and they talk regularly but Aunt Sophy has usually had a couple of glasses of Madeira wine and believes that Pod comes out of the decanter. Having been seen by a fully sober human is a different situation entirely. Arrietty is sent to her room early but hears her parents' worries voices discussing the situation and what to do about it.
Having managed to convince Homily that they will not have to emigrate to the badgers set in the meadow like their less well-to-do Borrower relations, Pod agrees to take Arrietty on her first Borrowing trip. She sticks close to her father but with his permission runs outside to wave at Homily over the grating. She meets The Boy and starts talking to him about the family until Pod comes to take her home.
After extreme panic on Homily's part, she listens to Arrietty's explanation and is excited that The Boy wants to get some new furniture for them from the doll house that has been forgotten about. She is always house proud but Pod worries that her new-found love of collecting things they don't need will jeopardize their existence.
Pod is right to worry; Mrs Driver, the bitter, unkind housekeeper, has noticed things going missing. Determined to find out what has happened she initially suspects The Boy but feeling a draft and seeing a disturbed tile on the floor, she lifts it up to reveal the Clock family relaxing in their home. They run from view but she spots them and decides to call the rat catcher who prepares to gas them. The Boy runs to the grandfather clock and in the nick of time moves the slab that is dealing the exit so that they can escape.
The story ends there much to Kate's chagrin. Mrs May tells her that The Boy was her brother and that although she never saw the Borrowers herself, she left a bag if supplies for them at the entrance of the badger set. The bag disappeared - and she was sure she could smell hot pot cooking.