The novel is a first-person account narrated by Kenneth Watson, who lives in Flint, Michigan with his parents Daniel and Wilona Watson; his older brother Byron; and younger sister Joetta. Kenny is a bright and shy fourth grader at Clark Elementary School who is bullied for his intelligence and his lazy eye. He struggles to make friends until Rufus Fry moves to town from Arkansas. Rufus is also bullied by the other students for his "country" clothes and accent, which initially makes Kenny reluctant to befriend him, but they are soon inseparable. The boys are both bullied and protected by Kenny's 13-year-old brother Byron and Byron's friend Buphead. Byron has been retained twice because he often skips school and is, therefore, still in sixth grade. He invents a series of "fantastic adventures" that constantly get him into trouble, such as playing with matches in the house and setting things on fire, abusing his parents' credit at the grocery store to buy himself treats, and getting a conk hairstyle against his parents' orders.
Daniel and Wilona eventually become so frustrated with Byron's behavior issues that they decide to deliver him to Birmingham, Alabama to live with Wilona's mother, Grandma Gloria Sands, for at least the summer and possibly an entire year. As soon as the school year concludes, the Watsons ready their car ("the Brown Bomber") and embark on a road trip from Flint to Birmingham to deliver Byron and visit Grandma Sands. Kenny, who had been looking forward to the "battle royal" between his grandmother and Byron, is disappointed when just a few sharp words from Grandma Sands have Byron speaking respectfully and generally behaving himself, and he soon resolves to seek out his own "adventures."
Grandma Sands warns the children to avoid a local swimming hole because of a dangerous whirlpool, which Kenny mishears as "Wool Pooh" due to her thick Alabama accent. Kenny wants to swim there anyway and is frustrated when Byron and Joetta refuse to go along. Ignoring the warnings of both Grandma Sands and Byron, Kenny wades into the seemingly tranquil water and tries to catch a turtle but is pulled under by the whirlpool. Remembering his grandmother's words, Kenny imagines that the Wool Pooh, "Winnie the Pooh's evil twin", has grabbed his ankle and is trying to drown him. He struggles to reach the surface three times but is yanked down again, and he'd lost hope when he sees a vision of his little sister dressed like an angel pointing upward. Kenny kicks towards the surface again as Byron arrives at the pool and jumps in to save him. They agree not to tell anyone about the incident, and though Kenny believes he'd really seen the Wool Pooh and an angel during his ordeal, Byron insists that there was nothing else in the water.
Shortly afterwards, a bomb explodes at a nearby church where Joetta is attending Sunday school. After his panicked parents rush to the scene, Kenny wanders over to the smoldering church building in a daze and is convinced that he sees the Wool Pooh again, lurking in the smoke and clinging to what he thinks is Joetta's torn shoe. He takes the shoe and walks back to Grandma Sands' house in shock before anyone notices him at the church. When he arrives, Kenny is confused to find Joetta already there and assumes that she must be an angel again. Joetta is disturbed by her brother's behavior and claims that she saw him calling and waving to her across the street from the church, but took off running when she approached, leading her back to the house. She also notes that the clothes he was wearing then were different than the ones he currently has on. Kenny soon realizes that his sister is fine and has no idea that a bomb went off at the church just after she'd left.
The Watsons return to Flint. Kenny is unable to process the events in Birmingham and avoids his family and friends over the ensuing weeks, instead spending many hours hiding behind the sofa. Byron eventually coaxes him out and gets Kenny to talk about what happened, which finally brings a flood of tears from Kenny. Encouraging his younger brother to "keep on stepping," Byron explains that although the world is not perfect, he has to keep moving on.
