The plot begins with the arrival of the main protagonist, Gene, to his alma mater, Devon School, where he was a pupil fifteen years ago, just before the start of the second World War. The narrator gets to reminiscing about his younger years when he was just a student; most of his memories revolve around his friend, Phineas. Gene describes himself as having an obedient and conforming personality while his friend is the quite the rule-breaker. He reflects that being around Phineas made him let loose a little and not care about following the rules.
We are introduced to more characters as the plot progresses in the form of a continual flashback. The main character, however, remains Phineas, also known as Finny, and his various adventures in Devon School. He is described as being smooth enough to even deflect a punishment from the substitute headmaster, Mr. Patch-Withers, for wearing the school tie as a belt.
Gene also mentions an incident which works imperatively in allowing us to realize another side of Finny; the loyal and compassionate friend. Gene goes diving with Phineas and loses his balance. Thankfully, Finny grabs hold of him, thus saving him from falling down alone, which could have resulted in Gene’s death.
The two friends form a club, the “Super Suicide Society of the Summer Session”, to think up of new, exciting and dangerous games. Gradually, more and more of their friends join in and Finny invents a new kind of sport called blitzball which is a combination of football and rugby. Naturally, it is a hit among the boys and Finny proves to be the most skilled at it. However, the rules of the game are such that there are no possible winners, showing Finny’s uncompetitive nature. Another day, he and Gene take a walk by the swimming center and as a challenge, he attempts to break one of the past records. He is successful but asks Gene not to disclose the fact to anyone. That same day, the boys take a stroll down the beach although it is against the rules. The boys enjoy a nice trip and at the end, Finny states that he considers Gene to be his best friend, although the narrator is hesitant to say the same.
Gene’s academics begin to suffer due to him spending so much time with Finny in the club and he decides to take his studies more seriously. Although Finny had never thought much about rivalry, Gene is wary of his friend’s natural excellence in athletics and convinces himself that the only way to keep a balance would be for him to be the best in academics. He also comes to believe that Finny doesn’t want him to excel in his studies by distracting him with new sports.
The night before the exams, Finny invites Gene to come see the initiation of a new member into the club. The narrator is reluctant but Finny touches a nerve when he states that he never knew that Gene had to study so hard to be good in it. Although he expresses it as a form of admiration, Gene takes it as a challenge and agrees to come. After the initiation, the two boys decide to jump out from the tree. However, due to a deliberate mistake on Gene’s part, Finny is heavily hurt.
Gene is hurt to learn that because of his mistake, Finny will no longer be able to play sports. He resolves to tell his friend the truth and come clean but is unable to confess when the opportunity offers itself. Finny is sent home. When the summer session is over, Gene visits Finny and tells him the truth but he refuses to believe it and grows furious at the notion of it.
After going back to school, it is as if nothing is the same. Finny, however, is still the loyal friend who calls up Gene to ensure that they are still friends. He is surprised to hear that Gene has left crew practice and convinces him to participate, for his sake. Gene agrees, although the rest of the fall, he is halfhearted in everything he does. One of the boys accuses him of hurting Finny to get the room all to himself. Although Gene brushes him off, he feels guilty inside.
Meanwhile, the war is upon the country and few of the boys are thinking of enlisting. Feeling lonely without the company of his friend, Gene is also considering it when suddenly, the plot takes a new turn: Finny is back. He persuades Gene out of enlisting and is disappointed to learn that he is not participating in sports. He plans on coaching Gene for the next Olympics although the narrator doubts that there will be one due to the war. Nevertheless, the boys keep training and one morning, Gene is surprised to see that he is getting much better, almost as natural as Finny was.
One of the boys, Leper, decides to enlist in the war and is automatically hailed as a hero by his peers. Finny is dismissive of the change in the mood since he considers the war to be just another way of keeping people in their designated places. He asks Gene to help him arrange a winter carnival. The idea is a hit and the boys are more than relieved to have a little break from the studying and war talk. During the break, however, a telegram arrives, notifying the boys that Leper had run away from the army.
Gene visits Leper at his home who explains that army was about to let him go due to his mental instability. Gene, too, can see the difference and after they both go on a walk, Leper’s gibberish talk scares him and he flees from him.
The narrator returns to school, only to find a new nuisance waiting for him. Brinker, the boy who had accused him of causing Finny’s accident refuses to give up. He is bent on making Finny believe that Gene had done it deliberately and one night, he asks Leper, who was a witness to the scene, to confirm his statement. Finny is overwhelmed and runs out of the room, hurting his broken leg again by slipping on the marble stairs.
Finny is very badly hurt and refuses to talk to Gene when he visits him at the infirmary. He even hurts himself more by coming at Gene and then falling down. Gene apologizes and excuses himself but does not leave the premises. The next morning, he again visits Finny, bringing a few of his belongings, and this time, the boys have a real talk about the incident. Finny is confused and asks his friend to convince him that it was some blind impulse that made him throw him off the tree, not because Gene hated him. Gene affirms that it was some crazy impulse that made him act that way. Finny is able to gain closure from that and states that he believes Gene. The doctor asks Gene to come back later that evening, after the operation has been completed.
That evening, Gene comes back only to find out that Finny had died on the operation table. A piece of the bone marrow escaped and entered Finny’s bloodstream, blocking his heart. Gene is numb throughout the whole process and cannot even bring himself to cry at the funeral. He realizes that, with Finny’s death, a bit of himself has also ceased to be.
The school year is over and Devon had offered up a section of its area for the war. A training school is to be set up there called the Parachute Rigger’s School and Gene and Brinker watch as the men bring in the equipment for the setup. Gene’s batch has graduated and both the boys have decided to enlist in the war, Gene in the navy and Brinker in the coast guard. Brinker’s father is disappointed at the boys and condemns them for taking the safer path instead of taking part in the danger of the infantry.
At this point, the flashback ends and it is the older Gene who speaks in the present tense. He states that during his time in the war, he never had to kill anyone and that his real fight was in Devon School itself, with himself. Everybody eventually finds a rival in something or the other. For the other boys, such as Brinker and Leper, it was the war. The hostility of the war changed them as they found ways to deal with it; one by putting up an uncaring front and the other by losing his mind. Gene’s demon was his competition with his best friend and he dealt with it in a way that he believed is the reason why Finny is dead. Finny was the exception because he never considered anybody or anything to be the enemy; he understood that the real enemy is the demon from within and not the one that may seem the more apparent one.