The novel follows the misadventures of Penrod Schofield, a boy approaching his twelfth birthday, as he clashes with adult expectations and stumbles through the trials of boyhood in a small American city at the turn of the twentieth century.
Penrod's troubles begin on the day he must perform as the Child Sir Lancelot in "The Children's Pageant of the Table Round," written by Mrs. Lora Rewbush. Dreading the event, Penrod retreats to his private sanctuary, a sawdust-box in the family stable, where he hoists his reluctant dog Duke via a pulley-elevator and writes installments of his adventure story, "Harold Ramorez the Roadagent." His mother's call to lunch ends the reprieve. Afterward, his mother and his 19-year-old sister Margaret dress him in a humiliating costume cobbled from household castoffs: his mother's old bodice, his sister's stockings pinned as tights, his father's red flannel winter underwear, patent-leather slippers, and a golf-cape mantle. When Penrod sees himself in a mirror, he recognizes every garment and revolts, submitting only after a stern phone call from his father.
Backstage, Maurice Levy, a classmate dressed as the Child Sir Galahad, taunts Penrod about what he is hiding under his cape. The laughter of Marjorie Jones, the amber-curled girl Penrod adores, cuts him deeply. Fleeing to the janitor's room, Penrod spots a pair of discarded blue overalls and pulls them on beneath his mantle. Onstage, when the knights are commanded to remove their mantles, Penrod reveals the enormous overalls, one leg unrolled to elephantine proportions. The audience of 500 erupts in laughter, and the pageant collapses. Marjorie slaps Penrod and embraces Maurice, vowing never to speak to Penrod again. That evening, Mr. Schofield administers a spanking, but Penrod's distress soon fades to ordinary boredom.
The following Sunday, Penrod pockets his Sunday-school contribution and spends the dime on candy and a moving-picture show about a man who beats his wife and child. At school on Monday, Penrod loses himself in a daydream of soaring over the city and being adored by Marjorie. When his teacher, Miss Spence, calls his name repeatedly, Penrod shouts, "Oh, my goodness! Can't you keep still a minute!" Placed for hours on a stool of penitence, a classroom punishment seat, he faces expulsion. Desperate, he fabricates a tale drawn from the film, claiming his Uncle John has taken to drink and beaten Aunt Clara and her daughter, forcing them to flee to the Schofield home. Miss Spence, deeply moved, excuses him. The lie unravels when Aunt Clara encounters Miss Spence and receives a baffling expression of sympathy; Mrs. Schofield learns the truth, and Penrod is punished again.
At the Friday Afternoon Dancing Class, the instructor announces a cotillon, a formal group dance requiring each boy to secure a partner. Penrod races to Marjorie's house but arrives too late; Maurice has already claimed her. Rejected at every other house, Penrod finally calls on Miss Rennsdale, the youngest girl in the class, who bursts into tears. On the morning of the dance, Penrod and his friend Sam Williams concoct a noxious "smallpox medicine" from household refuse and trick Maurice into drinking it, expecting him to fall ill. Maurice, possessing an iron constitution, feels fine and departs with Marjorie. In despair, Penrod falls from the stable roof and sends Miss Rennsdale a note: He has "fell off the barn."
After milking his injury for a week, Penrod discovers new friends when a Black family moves into the cottage across the alley. Herman, a boy Penrod's age, and his younger brother Verman, who is tongue-tied and speaks unintelligibly, introduce themselves along with their raccoon. Penrod and Sam organize a "Big Show" in the stable hayloft, with Verman's enthusiastic but incomprehensible speech as the star attraction. The show gains a sensational exhibit when Roderick Magsworth Bitts, Junior, a sheltered boy from the town's most prominent family, claims that Rena Magsworth, a convicted poisoner, is his aunt. Penrod stars Roderick as "Only Living Nephew of Rena Magsworth, the Famous Murderess." A reporter publishes the story, and Roderick's furious mother storms the loft and carries her son away. That evening, both fathers find the boys hiding in the sawdust-box but each privately gives his son a quarter instead of a whipping.
Summer progresses. Margaret's suitor, Robert Williams, pays Penrod a dollar to stop his terrible singing. Penrod buys a ruined accordion and shares an idyllic hour with Marjorie, who is friendly now that Maurice is away at Atlantic City. But Penrod squanders the rest on a gluttonous binge at a traveling dog and pony show and falls desperately ill. After recovering, he learns that Marjorie's baby brother Mitchy-Mitch swallowed the two-cent piece Penrod gave him, and Marjorie's father has banned Penrod from the neighborhood.
Penrod next falls under the influence of Rupe Collins, a bullying older boy from the Third Ward school. Penrod imitates Rupe's swagger and threatens everyone with the catchphrase, "That's the way we do up at the Third." But when Rupe visits the stable and presses his face threateningly close to Herman's, Herman bites Rupe's nose. The brothers attack with a rake and a lawn-mower, and Rupe flees screaming, never to return. That evening, Penrod voluntarily shines his father's shoes, a sign he is returning to normal.
Before his birthday, a barber teases Penrod about the phrase "little gentleman," a title associated with the model boy Georgie Bassett, and the words become an unbearable insult. When Marjorie and Mitchy-Mitch taunt him with the phrase near a caldron of tar left by workmen, Penrod heaves a stone into the caldron, drenching all three children. That evening, the Reverend Mr. Kinosling, an affected young rector courting Margaret, comes to dinner and repeatedly calls Penrod "little gentleman." When Mr. Kinosling asks Penrod to fetch his hat, Penrod lines it with tar. Mr. Kinosling places the hat on his head, finds it impossible to remove, and departs forever.
On a broiling August afternoon, Herman performs an electrifying imitation of a revival preacher alternately ascending toward heaven and sliding toward hell. Georgie Bassett, goaded into proving his own claim to the ministry, climbs a tree in his yard shrieking the routine at full volume just as his mother hosts a tea party for Mr. Kinosling. Mrs. Bassett throws herself out the window in horror. Mr. Kinosling seizes the retreating Penrod and demands to know what Penrod will become. Penrod shouts: "A minister!"
On his twelfth birthday, Penrod's great-aunt Sarah Crim, 90 years old, gives him a pocket-knife and a fragile old sling-shot to return to his father, from whom she confiscated it 35 years earlier. She tells Penrod he is the Worst Boy in Town and observes that boys are "just people" who have not yet learned to disguise their selfishness. At his birthday party, a worldly visitor from New York named Fanchon Gelbraith teaches the children a scandalous dance, the "Slingo Sligo Slide." Fanchon monopolizes Penrod until Marjorie, jealous, storms onto the dance platform, seizes him by the ear, and marches him away. The mothers return from tea and discover the dancing, but Penrod, dragged away by Marjorie, is the only boy not caught, and his parents are, for once, proud.
At sunset, Penrod sits on the back fence with the sling-shot and aims at a sparrow, but the sun blinds him and the stone crashes through his father's window. Mr. Schofield storms outside, but when Penrod explains the sling-shot is the one Aunt Sarah confiscated 35 years ago, his father says gently, "Never mind, little boy. A broken window isn't much harm." Duke sits at Penrod's feet as the last light falls. A pink skirt flickers behind a tree, amber curls gleam, and a folded white note flutters down. Penrod reads Marjorie's message: "Your my bow."