The jumbo jet Bostan explodes over the English Channel. Two passengers plummet down to the water and survive: Gibreel Farishta, a famous Bollywood actor, and Saladin Chamcha, an obscure voice actor who lives in London. The narrator gives some background on the two men. Gibreel had a hardscrabble youth – he started working as a delivery boy as a teenager. When his parents died, he moved in with a foster family, the patriarch of which eventually arranged for him to become an actor. Shortly before the fateful flight, Gibreel had a bout with mental illness, but recovered. This caused him to lose his faith in God. Soon after his recovery, he met and fell in love with Alleluia Cone, an English mountain climber. Out of jealousy, his former lover, Rekha Merchant, committed suicide. Her ghost haunts Gibreel for the rest of the novel. Although Gibreel’s affair with Alleluia was brief, it inspired him to follow her to London to start a new life.
Saladin, born Salahuddin Chamchawala, grew up in Bombay, where he was molested by an older man and had a troubled relationship with his father, Changez Chamchawala. He always dreamed of moving to London, and got his wish when his father sent him to boarding school there. He became estranged from his father when Changez remarried; Saladin was particularly incensed that his new stepmother had the same name as his actual mother – Nasreen. After university, Saladin became a voice actor and shortened his name for commercial reasons. He married a beautiful but troubled white woman named Pamela Lovelace. Shortly before the fateful flight, he returned to India to perform in a George Bernard Shaw play. There, he started an affair with an old friend, Zeeny Vakil. He falls in with Zeeny’s friends, George Miranda and Bhupen Gandhi, both of whom are active in left-wing politics. Right before he leaves to return to London, Saladin breaks up with Zeeny because he felt she was too sympathetic to his father, Changez.
The doomed flight was hijacked by four Sikh nationalists, who landed it in the desert and held the passengers hostage for 111 days. Eventually, they took off for London. However, while over the English Channel, the hijackers fought amongst themselves, and accidentally detonated the plane.
During the fall from the airplane, Gibreel has the first of several elaborate visions. This vision introduces the Jahilia subplot, which is a revisionist retelling of the early history of Islam. It follows Mahound – an analog for Mohammed – a businessman who starts a new religion called Submission in the pagan city of Jahilia. (Submission is the literal translation of the word ‘Islam.’) The religion is unique for being monotheistic in an exclusively polytheistic culture. He faces opposition from the authorities, especially Karim Abu Simbel, the city’s Grandee. Abu Simbel hires Baal, a poet, to write verses attacking Mahound. Nevertheless, Abu Simbel remains nervous about the growing sect, and allows Mahound and his followers to be persecuted.
One day, Abu Simbel offers protection for Mahound's sect if he acknowledges three of Jahilia’s most important goddesses alongside Allah. Mahound climbs a mountain to consult with the archangel Gibreel, who reveals to him the word of God. Gibreel seems to affirm Abu Simbel’s request, so Mahound publicly acknowledges the existence of ‘Allah’s daughters.’ However, he soon recants, declaring that the revelation about the goddesses actually came from Satan, not God. He publicly repudiates his earlier proclamation. Abu Simbel and his wife Hind retaliate by murdering Mahound’s wife and uncle, and confining his followers to ghettoes. Eventually, Mahound and the other adherents of Submission flee to the more tolerant city of Yathrib.
Gibreel and Saladin undergo a curious transformation during their fall – they take on the personalities and physical characteristics of the archangel Gabriel and Satan, respectively. Eventually, they wash up on the English coast, where they are taken in by Rosa Diamond, a senile old woman. Someone sees the men crawling out of the water and reports them as illegal immigrants. The police arrive to arrest Saladin, who has started to turn into a goat. They do not arrest Gibreel, probably because he is dressed in Rosa's late husband's clothing. Saladin begs for Gibreel’s help, but his fellow survivor does nothing.
Gibreel befriends Rosa Diamond and listens to her long, rambling stories about her colorful youth in Argentina. One night, he takes her dancing, and she dies shortly thereafter.
On the way to London, the police officers beat Saladin, now a bleating goat-man, and refuse to believe he is a British citizen. Despite their racism, Saladin is eventually cleared and taken to a hospital to recover from his injuries. His physiotherapist, Hyacinth Phillips, and his fellow patients do not seem particularly surprised by his transformation, since they have all been transformed into animals as well. The narrator implies that this is a result of the prejudice they face from white English people. They escape the hospital en masse, and Saladin goes to his apartment.
The narration switches briefly to the perspective of Saladin’s wife, Pamela, who is having an affair with Saladin’s old friend and rival, Jumpy Joshi. As it turns out, Saladin managed to call home from Rosa’s house, but Jumpy answered the phone. When he tells Pamela her husband is alive, she does not believe him until he arrives to surprise them.
Meanwhile, Gibreel rides a train to London, where a fellow passenger, John Maslama, informs him that he is the archangel Gibreel. Gibreel does not believe him, and he heads to Alleluia’s house.
This section describes two more of Gibreel’s dreams. The first is a short, standalone dream; the second is the beginning of the novel's longer Titlipur subplot. In the first vision, a conservative Imam enlists Gibreel to help him regain control of his homeland, Desh (an analog for Iran). Gibreel does not want to help, but finds himself enslaved. The Imam forces Gibreel to fight the goddess Al-Lat, who has been incarnated as the empress of Desh, Ayesha. Gibreel kills her, and the Imam becomes the absolute ruler of Desh.
The second dream takes place in the rural village of Titlipur. A landowner, Mirza Saeed Akhtar tries and fails to conceive a child with his wife, Mishal. They adopt an itinerant toymaker, Ayesha, after finding her in their courtyard eating butterflies. She is beautiful but insane. As Ayesha grows older, Mirza Saeed begins to desire her, but does not actively pursue her.
One day, Ayesha’s hair turns white, and her dress turns into butterflies. She claims she has lain with the archangel Gibreel, news which breaks the heart of her suitor, Osman the clown. After this, Ayesha and Mishal become very close. One day, Ayesha diagnoses Mishal with terminal breast cancer, which a doctor confirms. She makes a prophecy that Mishal will be cured if the entire village makes a pilgrimage to Mecca on foot. This is impossible because the Arabian Sea stands between Titlipur and Mecca, but Ayesha promises that the archangel will part the sea for them when they arrive. She convinces the village to follow her. Mirza Saeed is skeptical, but follows in his Mercedes to make sure that Mishal stays safe.
Despite their romantic rivalry, Jumpy Joshi hides Saladin at the hotel owned by his neighbors, the Sufyans. The Sufyans do their best to help Saladin; their daughters, Mishal Sufyan and Anahita, are delighted by his transformation. Meanwhile, Saladin learns that his colleague Mimi Mamoulian is dating the scam artist Billy Battuta, and that he has lost his job as a voice actor on a television show about aliens. Saladin eventually grows too large to stay with the Sufyans, so Mishal and her older boyfriend, Hanif Johnson, take him to stay in the basement of a nightclub. Saladin spends that night consumed with hatred for Gibreel, whom he blames for all of his problems. The rage transforms Saladin back into a human.
Meanwhile, Gibreel rekindles his affair with Alleluia. However, he eventually has a vision wherein an angel orders him to leave Alleluia and spread the word of God through London. He complies, but everyone on the street thinks him insane. He has initial success with Orphia Phillips, a ticket seller, but when he tries to solve her romantic woes, he worsens her situation. He eventually becomes so frustrated that he walks into oncoming traffic, desperate for attention.
The car that hits him is driven by S.S. Sisodia, who concocts a scheme to produce a new film to return Gibreel to the spotlight. Sisodia brings him home to Alleluia, and together they take him to be treated for schizophrenia. Almost immediately after Gibreel begins to recover, Sisodia offers him a role playing the angel Gibreel. To promote the film, Gibreel agrees to headline a dance show in London. When he appears, the audience rushes the stage, and Gibreel levitates into the air and disappears. When he wakes up, he is back on Alleluia’s doorstep.
This section resumes the Jahilia plotline twenty-five years after the end of Part II. Submission has spread in Yathrib and Mahound has grown more powerful, so he decides to make a second attempt at converting Jahilia. However, his disciple Salman has lost faith, after noticing that Mahound’s proclamations always seem to benefit Mahound at the expense of others. Fearing he would be punished, Salman flees to Jahilia and confides his doubts in the poet Baal. Shortly after Salman arrives, Mahound follows and converts most of Jahilia – including his old nemesis, Abu Simbel. He establishes a theocracy that tightly controls the lives of the people, and persecutes dissenters like Salman.
Baal goes into hiding, joining the male staff of a brothel called The Curtain. Still itching to undermine Submission, Baal encourages the prostitutes to take the identities of Mahound’s twelve wives – a conceit that titillates the brothel’s patrons. This goes on for years. One day, Salman stops by to say goodbye to Baal, complaining that life in Jahilia has become too miserable for him to stay. Shortly after that, the brothel’s employees are arrested, tried, and executed. Not much later, Mahound dies; his last vision is of the goddess Al-Lat, one of the deities he repudiated in Part II.
Saladin’s wife Pamela becomes pregnant by Jumpy Joshi. Meanwhile, a prominent black activist, Dr. Uhuru Simba, is falsely accused of being a serial killer, the gruesome Granny Ripper. His arrest infuriates the immigrant and left-wing communities, who begin to demonstrate on his behalf. Saladin and Jumpy attend a meeting about the Simba case. At the meeting, Saladin sees Mishal Sufyan, to whom he is attracted – but her forehead is burning. He also has a vision of the angel Azraeel, Gibreel’s lieutenant, coming down to smite him. These omens make him realizes that the accident has changed him, and he decides to succumb to evil and kill Gibreel.
Saladin has an opportunity to do this at a party hosted by Billy Battuta and Mimi, held on the set of a film adaptation of Charles Dickens’s Our Mutual Friend. Most of the main characters from the London plot are invited, and when Saladin spots Gibreel there, he prepares to exact his revenge. However, Gibreel is sedated by antipsychotics, and does not recognize Saladin’s intentions. As they talk, Saladin mentions Jumpy, and Gibreel convinces himself that Alleluia is having an affair with Jumpy. Gibreel tries to murder Jumpy, but only succeeds in knocking him out.
Saladin visits Gibreel a few more times, but can never quite bring himself to commit the murder. On one visit, Gibreel subjects Saladin to a long, explicit monologue about his sexual encounters with Alleluia. Saladin uses this information in prank-calls to Gibreel, which makes him believe him that Alleluia is unfaithful. The tactic succeeds in exacerbating Gibreel's mental illness, and he leaves Alleluia. Meanwhile, John Maslama – the businessman from the train – stays committed to the idea that Gibreel is the archangel, and sells Gibreel a trumpet that Gibreel names Azraeel.
Dr. Uhuru Simba dies in prison under suspicious circumstances, which incites the immigrant community to riot. The unrest intensifies when the Granny Ripper murders continue, proving that Simba was innocent. Two fires start in the Brickhall neighborhood – one at the Sufyans’ café, and one at the community relations center. The second fire kills Jumpy and Pamela; the first becomes a point of confrontation for Gibreel and Saladin. When Saladin sees the café fire, he attempts to save the Sufyans, but is trapped under a beam. Gibreel, who has realized it was Saladin who made the phone calls, follows Saladin into the burning building with the intention of killing him, but decides at the last minute to save him instead.
Part VIII resumes the Titlipur plot. Ayesha’s employer, the toy merchant Sri Srinivas, joins the pilgrimage when he sees the enormous flock of butterflies that follow them. However, things soon begin to go wrong. Pilgrims die from thirst and exhaustion, and Ayesha develops an authoritarian streak, insisting that the pilgrims leave the corpses by the side of the road rather than burying them. Mirza Saeed tries to convince the villagers to turn back, but most of them ignore him. However, he does gain some supporters, including Osman, Sri Srinivas, Mishal’s mother Mrs. Qureishi, and Muhammad Din, a village elder whose wife was one of the first fatalities.
Word begins to spread of the pilgrimage, and it becomes both a media sensation and a point of sectarian tension. When the group arrives at the seaside suburb of Sarang, a violent mob awaits them. However, a torrential rain disperses the angry mob, keeping the the pilgrims safe. That Friday, they worship at a mosque. While there, Ayesha allows the Imam to order an abandoned baby stoned to death. This horrifies the pilgrims, and many of them lose faith in Ayesha.
They follow her to the beach anyway, where the butterflies take the shape of the archangel Gibreel. This restores their faith, and they walk into the water and begin to drown silently. Mirza Saeed and the other doubters dive in to rescue them but do not succeed. When the doubters awake in the hospital, all except Mirza Saeed claim that they saw the sea part underwater for the pilgrims to walk through – despite the fact that the pilgrims’ bodies have started to wash up on the shore. Mirza Saeed returns home alone and allows himself to starve. Just as he is dying, he has a vision of Ayesha, and finally opens his heart to her. The sea parts, and they walk to Mecca together.
Eighteen months after the Brickhall fires, Saladin gets word that his father is dying. He immediately forgives Changez and returns to India, where he tenderly cares for his father and reconciles with his stepmother, Nasreen the Second. When his father dies, Saladin is impressed by the man's courage. He changes his name back to Salahuddin Chamchawala, and falls back in with Zeeny, John, and Bhupen. He even attends a communist demonstration, something he would never have done before.
Gibreel returns to India after making his Jahilia and Titlipur visions into films, both of which flopped. S.S. Sisodia brings Alleluia to Gibreel’s house and tries to reconcile them, hoping that if Gibreel’s love life is happier, he will regain his box office magnetism. Still tortured by Saladin’s prank calls, Gibreel murders them both. He then goes to Saladin, confesses what he has done, and kills himself. Saladin sadly leaves the house with Zeeny.