The novel opens on an overcast October 23. Two friends – William "Will" Halloway and Jim Nightshade – both on the verge of their 14th birthdays, encounter a strange lightning rod salesman, Tom Fury. He announces that a storm is coming their way. The salesman gives Jim a lightning rod because he tells the boys that one of their houses is in danger. Throughout the night, Will and Jim meet up with townsfolk who also sense something in the air. Among the townspeople is Will's 54-year-old father, Charles Halloway, who works in the local library. Both Mr. Halloway and the boys learn about the carnival that is to start the next day. Jim and Will are excited that a carnival has come so late in the year, but Charles has a bad feeling about it.
The boys run out to watch the carnival arrive at three in the morning. As the train pulls in, the smoke billows in circles and solidifies as the carnival. The boys go the next day to explore the carnival and encounter their 7th grade teacher, Miss Foley, who is dazed after visiting the Mirror Maze. Jim insists on coming back that night and Will agrees, but when they bump into the lightning-rod salesman's abandoned bag, they realize that they must stay to learn what happens after dark. After investigating all of the rides, they go up to a carousel, which has an out-of-order sign. Mr. Cooger suddenly grabs Will and Jim after they climb up on horses and he informs them the merry-go-round is broken. Mr. Dark arrives and tells him to put them down. He pays attention only to Jim, who is enthralled by what he sees. The boys run away and then hide and wait. Both witness Mr. Cooger riding backwards on the carousel (as the music plays backwards), and when he steps off, to their shock, he is 12 years old.
They follow young Mr. Cooger to Miss Foley's house, where he pretends to be the nephew she was expecting. Jim tries to talk with him, because he wants to ride the carousel, but Will stops him. Jim takes off in the direction of the carnival. When Will catches up, Mr. Cooger is riding the carousel growing older, and Jim is about to join him. Will knocks the switch on the carousel and it flies out of control, spinning rapidly forward. Mr. Cooger ages over 100 years before it stops, and Jim and Will take off. They return with the police, but Mr. Cooger is nowhere to be found. Inside the tents they find him all set up as a new act, "Mr. Electrico", a man they run electricity through. Mr. Dark tells the boys to come back to the carnival the next day. Will tries to keep his father out of the situation, promising him that he will tell all soon. That night, the Dust Witch floats by in her balloon to find Jim and Will. She marks Jim's roof with shiny slime, which the boys then remove with a hose. Will lures her to an abandoned house and destroys her balloon with a bow and arrow. They later both dream of a bizarre funeral for the balloon, featuring a giant, misshapen coffin.
The next day the boys find a girl crying under a tree and realize she is the former Miss Foley made young again but also totally blind. They leave the girl where she is, checking Miss Foley's house to confirm the theory, but when they return for her, they're cut off by a parade. The carnival is out searching the streets for the two boys and has now taken young Miss Foley with them. The boys hide, and Will's father spots them hiding under a storm drain in front of the cigar store. The boys convince him to keep quiet. Mr. Dark later arrives to talk to him. Mr. Halloway pretends not to know the two boys, whose faces are tattooed on the man's hand, but when the Witch comes and begins to sense the boys' presence, he blows cigar smoke at her, choking her and forcing her to leave. Mr. Dark then asks Charles Halloway for his name, and Will's father tells him he is the town library's janitor. That night Will and Jim meet him at the library where he has done research into his own father's ministerial notes. The carnival arrives once a generation, and leaves in the midst of a giant storm. Mr. Dark appears, and the boys hide in the book stacks. He discovers both of them and crushes the janitor's hand when Mr. Halloway attempts to fight him. The tarot witch casts spells on the boys to mesmerize them and also tries to stop Mr. Halloway's heart. Just before he is about to die, Charles looks at the Witch and begins to laugh hysterically. His laughter wounds her deeply and drives her away. He then follows Mr. Dark to the carnival to rescue the boys.
At the carnival, Charles triumphs over Mr. Dark, finds his son in the mirror maze, kills the Witch with a smile on a bullet, and destroys all the mirrors by using laughter and cheer. Then he and Will search for Jim. Mr. Cooger turns to dust and blows away before he can be saved by the carousel. Jim runs to the merry-go-round and rides it forward. Will tries to stop him and grabs onto his leg. They both end up going for a ride before Will jumps off and rips Jim away from the machine. Jim falls into a stupor, close to death. A child comes begging them to help him, but Mr. Halloway recognizes the boy as Mr. Dark. He holds the boy tight and kills him with affection, because Mr. Dark cannot survive in such close contact with someone so happy. The carnival falls apart as Will tries to revive Jim. They save Jim by singing and dancing and laughing, their happiness bringing him back from the edge of death.
