August or "Auggie" Pullman, a ten-year-old boy living in New York City, was born with a facial deformity that has made it difficult for him to make friends. He lives with his parents, his older sister Via, and his dog Daisy. He has been homeschooled up until the fifth grade, but his parents have decided that it is time for him to go to a real school. They enroll him in Beecher Prep, a neighborhood private school, and take him to meet the principal, Mr. Tushman. While August is there, some of the kids who will be in August's grade take him on a tour of the school; one of them, Jack Will, is nice, but another, Julian, is noticeably rude.
Auggie settles into the first few months of school and his classmates slowly get used to the way his face looks. He becomes friends with Jack, and with a girl named Summer who sits with him at lunch on the first day. Apparently, a rumor that touching Auggie will give you the "plague" arises, so his classmates make a point of avoiding touching him, so that Auggie begins to feel alienated. Things get a lot worse on Halloween, typically Auggie's favorite day of the year, when Auggie overhears Jack say to Julian and some other boys that he would kill himself if he looked like Auggie. Jack is completely unaware that Auggie himself is sitting nearby, disguised in a Bleeding Scream costume.
The story switches perspective to Via, Auggie's older sister, who begins high school at the same time that Auggie starts middle school. Via has had to come to terms with the fact that her family's universe revolves around Auggie and his needs; hers often get pushed to the side. The only person who put her first was her grandmother, Grans, who is dead by the time the narrative begins.
Via is also dealing with school issues, since her former best friends, Miranda and Ella, stopped talking to her over the summer. Via feels neglected after the first day of school, since her mother appears more concerned with Auggie's day than with hers. A rift continues to grow between Via and her former friends, and Via settles into new group. On Halloween, Via is confused when Auggie comes home early, claiming to be sick and refusing to go trick or treating. He reveals to her what happened with Jack, and she convinces him that some kids will always be mean. Auggie, according to her, must move past such dilemmas and keep going to school. Auggie surprises Via by telling her that Miranda called to talk to him, and asked about her.
Next comes Summer's point of view. Summer spends time with Auggie because she legitimately wants to be his friend, not because Mr. Tushman asked her to. Since Auggie is mad at Jack, Summer becomes his best friend, and their two families hit it off as well. Summer struggles over whether to keep hanging out with Auggie or to hang out with the popular crowd instead, but ultimately chooses Auggie. When Jack eventually asks Summer why Auggie is mad at him, she gives him one clue: "Bleeding Scream."
The next section is told from Jack's perspective, and he backtracks to when Mr. Tushman first asked him to try to be a friend to the new student. He remembers seeing Auggie when they were both very little: at this earlier time, Jack was disconcerted by Auggie's face. Jack also has some struggles at home, since his family is not wealthy -- a sharp contrast to some other families with children in private schools.
When Jack puts two and two together and figures out what Auggie overheard, he feels terrible. He really does want to be Auggie's friend, but he got caught up in an attempt to be accepted by kids like Julian. When Julian tells him one day that being friends with Auggie is not worth it, Jack gets so angry that he punches Julian in the face. This conflict sets off a series of apology letters involving Jack, Mr. Tushman, and Julian, and Jack and Auggie eventually make up and become friends again. When Jack and Auggie return to school after winter break, though, Jack realizes that Julian has turned most of the boys in their grade against them and that a "war" has begun.
The perspective then switches to Via's new boyfriend, Justin, who has just met Auggie. Justin is good for Via, because he makes her feel important and valued. Since his own parents are divorced, Justin also enjoys spending time with the unified Pullman family. Auditions for the school play at his and Via's high school arrive, and he gets cast as the male lead in Our Town, while Via's old friend Miranda gets cast as the female lead with Via as the understudy.
Auggie's perspective comes back for the first time since the beginning of the novel: the situation has gotten better at school as students grow tired of the "war" between Julian and Jack. The Pullman family gets in a fight one day when Auggie realizes that Via has been hiding her involvement in the school play from him. She does not want him to come, because then she would be known once again as the girl with the deformed brother. During the fight, though, the Pullmans' dog Daisy is discovered to be extremely sick. She must be put to sleep, a choice which devastates the family. This loss also makes Via forget about the fight, and the whole family goes to the school play to see Justin. They expect to see Miranda in the lead female role, but then get a shock: Miranda apparently fell sick right before the show, so instead Via performs the lead role, and she does an amazing job.
Miranda gets a chance to tell her story now: she has avoided Via since school started because, during the summer, she told a lot of lies at camp and pretended she had a deformed little brother in order to become popular. She secretly misses Via, though. On the opening night of the play, Miranda has no one there to see her, so after she sees the Pullman family in the audience she fakes an illness so that Via can go onstage instead. This ploy gives Via and Miranda an opportunity to patch up their relationship.
The final section of the novel switches back to Auggie. The fifth grade goes on a retreat at a nature reserve for three days: this is Auggie's first time sleeping away from home. Things go great until the second night, when the students are watching an outdoor movie. Jack and Auggie go into the woods so that Jack can pee; while there, they encounter a bunch of older kids from another school, who make fun of Auggie and try to hurt him. Luckily, three of the boys from Beecher Prep who are usually mean to Auggie -- Henry, Miles, and Amos -- come to Auggie's rescue, although one of the older kids steals Auggie's hearing aids.
This incident makes Auggie extremely popular, however. By the final stages of the novel, almost everyone has at last warmed up to him and wants to be his friend. Things start looking up: the Pullmans get a new puppy, and Auggie learns from Mr. Tushman that Julian will not come back to Beecher Prep the following year. Graduation arrives; Auggie wins a special award for courage and kindness. He realizes how far he has come since the beginning of school, and he now has a solid group of friends and feels comfortable with who he is. The novel ends with his mother whispering in his ear, calling him a "wonder."