The fictional memoirs of Forrest "Little Tree" Carter begin in the late 1920s when, as the protagonist, his parents die and he is given over into the care of his Cherokee grandparents at the age of five years. The book was originally to be called Me and Grandpa, according to the book's introduction. The story centers on a clever child's relationship with his Scottish-Cherokee grandfather, a man named Wales (an overlap with Carter's other fiction).
The boy's Cherokee "Granpa" and Cherokee "Granma" call him "Little Tree" and teach him about nature, farming, whiskey making, mountain life, society, love, and spirit by a combination of gentle guidance and encouragement of independent experience.
The story takes place during the fifth to tenth years of the boy's life, as he comes to know his new home in a remote mountain hollow. Granpa runs a small moonshine operation during Prohibition. The grandparents and visitors to the hollow expose Little Tree to supposed Cherokee ways and "mountain people" values. Encounters with outsiders, including "the law," "politicians," "guv'mint," city "slickers," and "Christians" of various types add to Little Tree's lessons, each phrased and repeated in catchy ways. (One of the syntactic devices the book uses frequently is to end paragraphs with short statements of opinion starting with the word 'which,' such as "Which is reasonable.")
The state eventually forces Little Tree into a residential school, where he stays for a few months. At the school, Little Tree suffers from the prejudice and ignorance of the school's caretakers toward Indians and the natural world. Little Tree is rescued when his grandparents' Native American friend Willow John notices his unhappiness and demands Little Tree be withdrawn from the school.
At the end, the book's pace speeds up dramatically and its detail decreases; A year or so later, Willow John takes sick, sings the passing song, and then dies. Two years after that, Granpa dies from complications of a fall, telling the boy "It was good, Little Tree. Next time, it will be better. I'll be seein' ye.", before slipping away.
Early the following spring after performing her Death Chant, Granma dies a peaceful death in her rocking chair on the front porch while Little Tree is away. The note pinned to her blouse reads: “Little Tree, I must go. Like you feel the trees, feel for us when you are listening. We will wait for you. Next time will be better. All is well. Granma.” Little Tree heads west with the two remaining hounds and works briefly on various farms in exchange for food and shelter.
The book ends just before the Great Depression after first one and then the other of Little Tree's last companions, two of Granpa's finest hounds, die, signaling his coming of age (Little Red falls through creek ice and Blue Boy dies a while later of old age), after which he moves on with his life, always remembering “The Way” which his grandparents instilled into his soul.