The novel is set in London in 1886 and follows the life of Mr. Verloc, a secret agent. Verloc is also a businessman who owns a shop which sells pornographic material, contraceptives, and bric-a-brac. He lives with his wife Winnie, his mother-in-law, and his brother-in-law, Stevie. Stevie has a mental disability, possibly autism, which causes him to be very excitable; his sister, Verloc's wife, attends to him, treating him more as a son than as a brother. Verloc's friends are a group of anarchists of which Comrade Ossipon, Michaelis, and "The Professor" are the most prominent. Although largely ineffectual as terrorists, their actions are known to the police. The group produce anarchist literature in the form of pamphlets entitled F.P., an acronym for The Future of the Proletariat.
The novel begins in Verloc's home, as he and his wife discuss the trivialities of everyday life, which introduces the reader to Verloc's family. Soon after, Verloc leaves to meet Mr. Vladimir, the new First Secretary in the embassy of a foreign country. Although a member of an anarchist cell, Verloc is also secretly employed by the Embassy as an agent provocateur. Vladimir informs Verloc that from reviewing his service history he is far from an exemplary model of a secret agent and, to redeem himself, must carry out an operation – the destruction of Greenwich Observatory by a bomb explosion. Vladimir explains that Britain's lax attitude to anarchism endangers his own country, and he reasons that an attack on 'science', which he claims is the current vogue amongst the public, will provide the necessary outrage for suppression. Verloc later meets with his friends, who discuss politics and law, and the notion of a communist revolution. Unbeknownst to the group, Stevie, Verloc's brother-in-law, overhears the conversation, which greatly disturbs him.
The novel flashes forward to after the bombing has taken place. Comrade Ossipon meets The Professor, who discusses having given explosives to Verloc. The Professor then describes the nature of the bomb which he carries in his coat at all times: it allows him to press a button which will blow him up in twenty seconds, and those nearest to him. After The Professor leaves the meeting, he stumbles into Chief Inspector Heat. Heat is a policeman who is working on the case regarding a recent explosion at Greenwich, where one man was killed. Heat informs The Professor that he is not a suspect in the case, but that he is being monitored due to his terrorist inclinations and anarchist background. Knowing that Michaelis has recently moved to the countryside to write a book, the Chief Inspector informs the Assistant Commissioner that he has a contact, Verloc, who may be able to assist in the case. The Assistant Commissioner shares some of the same high society acquaintances with Michaelis and is chiefly motivated by finding the extent of Michaelis's involvement in order to assess any possible embarrassment to his connections. He later speaks to his superior, Sir Ethelred, about his intentions to solve the case alone, rather than rely on the effort of Chief Inspector Heat.
The novel then flashes back to before the explosion, taking the perspective of Winnie Verloc and her mother. At home, Mrs. Verloc's mother informs the family that she wishes to move out of the house. Mrs. Verloc's mother and Stevie use a hansom which is driven by a man with a hook in the place of his hand. The journey greatly upsets Stevie, as the driver's tales of hardship coupled with his menacing hook scare him to the point where Mrs. Verloc must calm him down. On Verloc's return from a business trip to the continent, his wife tells him of the high regard that Stevie has for him and she implores her husband to spend more time with Stevie. Verloc eventually agrees to go for a walk with Stevie. After this walk, Mrs. Verloc notes that her husband's relationship with her brother has improved. Verloc then tells his wife that he has taken Stevie to go and visit Michaelis, and that Stevie would stay with him in the countryside for a few days.
As Verloc is talking to his wife about the possibility of emigrating to the continent, he is paid a visit by the Assistant Commissioner. Shortly thereafter, Chief Inspector Heat arrives to speak with Verloc, without knowing that the Assistant Commissioner had left with Verloc earlier that evening. The Chief Inspector tells Mrs. Verloc that he had recovered an overcoat at the scene of the bombing which had the shop's address written on a label. Mrs. Verloc confirms that it was Stevie's overcoat, and that she had written the address. On Verloc's return, he realises that his wife knows her brother has been killed by Verloc's bomb, and confesses what truly happened. A stunned Mrs. Verloc, in her anguish, then fatally stabs her husband.
After the murder, Mrs. Verloc flees her home, where she chances upon Comrade Ossipon, and begs him to help her. Ossipon assists her while confessing romantic feelings but secretly with a view to possess Mr Verloc's bank account savings. They plan to run away and he aids her in taking a boat to the continent. However, her instability and the revelation of Mr. Verloc's murder increasingly worry him, and he abandons her, taking Mr Verloc's savings with him. He later discovers in a newspaper that a woman had disappeared, leaving behind her a wedding ring, before drowning herself in the English Channel.
- Mr. Adolf Verloc: a secret agent who owns a shop in the Soho region of London. His primary characteristic, as described by Conrad, is indolence. He has been employed by an unnamed embassy to spy on revolutionary groups, which then orders him to instigate a terrorist act against the Greenwich Observatory. Their belief is that the resulting public outrage will force the English government to act more forcibly against emigre socialist and anarchist activists. He is part of an anarchist organisation that creates pamphlets under the heading The Future of the Proletariat. He is married to Winnie, and lives with his wife, his mother-in-law, and his brother-in-law, Stevie.
- Mrs. Winnie Verloc: Verloc's wife. She cares deeply for her brother Stevie, who has the mental age of a young child. Of working class origins, her father was the owner of a pub. She is younger than her husband and married him not for love but to provide a home for her mother and brother. A loyal wife, she is deeply disturbed upon learning of the death of her brother due to her husband's plotting, and kills him with a knife in the heart. She dies, presumably by drowning herself to avoid the gallows.
- Stevie: Winnie's brother has the mental age of a young child and is very sensitive and is disturbed by notions of violence or hardship. His sister cares for him, and Stevie passes most of his time drawing numerous circles on pieces of paper. Verloc, exploiting both Stevie's childlike simplicity and outrage at suffering, employs him to carry out the terrorist attack on the Greenwich Observatory. However, Stevie stumbles and the bomb explodes prematurely.
- Mrs. Verloc's mother: Old and infirm, Mrs Verloc's mother leaves the household to live in an almshouse, believing that two disabled people (herself and Stevie) are too much for Mr Verloc's generosity. The widow of a publican, she spent most of her life working hard in her husband's pub and believed Mr Verloc to be a gentleman because she thought he resembled patrons of business houses (pubs with higher prices, consequently frequented by higher classes).
- Chief Inspector Heat: a policeman who is dealing with the explosion at Greenwich. An astute and practical man who uses a clue found at the scene of the crime to trace events back to Verloc's home. Although he informs his superior what he is planning to do with regards to the case, he is initially not aware that the Assistant Commissioner is acting without his knowledge. Heat knew Verloc before the bombing as Verloc had supplied information to Heat through the Embassy. Heat has contempt for anarchists who he regards as amateurs, as opposed to burglars who he regards as professionals.
- The Assistant Commissioner: of a higher rank than the Chief Inspector, he uses the knowledge gained from Heat to pursue matters personally, for reasons of his own. The Assistant Commissioner is married to a lady with influential connections. He informs his superior, Sir Ethelred, of his intentions, and tracks down Verloc before Heat can.
- Sir Ethelred: the Secretary of State (Home Secretary) to whom the Assistant Commissioner reports. At the time of the bombing he is busy trying to pass a bill regarding the nationalisation of fisheries through the House of Commons against great opposition. He is briefed by the Assistant Commissioner throughout the novel who he often admonishes to not go into detail.
- Mr. Vladimir: the First Secretary of an embassy of an unnamed country. Though his name might suggest that this is the Russian embassy, the name of the previous first secretary, Baron Stott-Wartenheim, is Germanic, as is that of Privy Councillor Wurmt, another official of this embassy. There is also the suggestion that Vladimir is not from Europe but Central Asia. Vladimir thinks that the English police are far too soft on émigré socialist and anarchists, which are a real problem in his home country. He orders Verloc to instigate a terrorist act, hoping that the resulting public outrage will force the English government to adopt repressive measures.
- Michaelis: a member of Verloc's group, and another anarchist. The most philosophical member of the group, his theories resemble those of Peter Kropotkin while some of his other attributes resemble Mikhail Bakunin.
- Comrade Alexander Ossipon: an ex-medical student, anarchist and member of Verloc's group. He survives on the savings of various women he seduces, mostly working class. He is influenced by the theories on degeneracy of Cesare Lombroso. After Mr Verloc's murder he initially helps, but afterwards abandons Winnie leaving her penniless on a train. He is later disturbed when he reads of her suicide and wonders if he will be able to seduce a woman again.
- Karl Yundt: a member of Verloc's group, commonly referred to as an "old terrorist".
- The Professor: another anarchist, who specialises in explosives. The Professor carries a flask of explosives in his coat that can be detonated within twenty seconds of him squeezing an india rubber ball in his pocket. The police know this and keep their distance. The most nihilistic member of the anarchists, the Professor feels oppressed and disgusted by the rest of humanity and has particular contempt for the weak. He dreams of a world where the weak are freely exterminated so that the strong can thrive. He supplies to Mr Verloc the bomb that kills Stevie.