The book begins with two twelve-year-old girls, Zanna and Deeba, who have begun to notice several strange things happening around them, all of them centering on Zanna.
After she and her friends are attacked by a dark cloud, Zanna spends the next two nights at Deeba's house. Deeba is awoken in the middle of the night by spies moving a broken umbrella. The girls follow it into the basement of a building, where they are drawn through a gap between the worlds of London and Un Lun Dun (or UnLondon).
UnLondon is a nonsensical mirror version of London, inhabited by various creatures and animated items that have been discarded by the inhabitants on London. A boy named Hemi saves them from a roving pile of trash but is later shooed away by the tailor Obaday Fing who reveals that the boy is a ghost who was trying to get close enough to them to possess one of them. In conversation he realises that Zanna is the "Shwazzy," a prophesied chosen one who is destined to save UnLondon from the Smog – an evil, sentient cloud of pollution.
With the help of Fing, Skool (a friend of Fing's in an old-fashioned diving suit), Conductor Jones, Rosa the bus driver, and the Slaterunners (a tribe of people who walk only on roofs), Zanna and Deeba make their way to the Propheseers where they learn more about the Smog. Apparently, after the Smog was created in London, a group of weatherwitches called the "Armets" battled it with a magic weapon called the "Klinneract." However, the Smog was not killed. Instead, it travelled to UnLondon. It is prophesied in The Book (a talking tome) that the Shwazzy would come one day and save UnLondon.
But, in spite of what is prophesied, Zanna fails in her first battle against the Smog. Brokkenbroll, master of broken umbrellas (or unbrellas) arrives in time to shoo the Smog away using a new technique he and Benjamin Unstible (a Propheseer who was presumed dead) came up with. Zanna is severely injured and is sent home with Deeba with her memories of the city erased. Instead, the city turns to Brokkenbroll and Unstible who begin handing out Smog-resistant unbrellas to defend the people of UnLondon.
However, Deeba, who still remembers UnLondon, begins to search for things related to it on the internet, hoping she can find someone to talk to. She discovers that Armets is really RMetS. This leads her to question everything she has learned. Upon further investigation she discovers that Unstible has been reported dead but that he had been studying the Clean Air Act. Just as UnLondoners misheard "RMetS" as "Armets," they misheard "Clean Air Act" as "Klinneract."
She decides to travel back to UnLondon. After several tries, she finally finds a way back. She goes to Wraithtown, the town of ghosts. With the help of Hemi she verifies Unstible's death and sets out to warn the Propheseers. Unfortunately, on the way, Deeba and Hemi are taken to Brokkenbroll, who is revealed to be working with the Smog, which has re-animated Benjamin Unstible's body.
They escape to warn the Propheseers, who refuse to listen to her. They run from them as well, escaping with The Book. The Book, although it has proved to be less-than-accurate, agrees to help them fulfil the Shwazzy's tasks and defeat the Smog in the limited time Deeba has before everyone in London forgets that she exists (this happens to everything that comes to UnLondon). Deeba and Hemi are aided in their quest by Obaday, Rosa, Jones; the utterlings Diss, Bling and Cauldron; and Yorick Cavea and Curdle the milk carton. They collect the UnGun, an ultimate weapon which can be loaded with anything. Deeba, under the banner of 'the Unchosen One', uses it to defeat the Smog and save UnLondon.
