Pod and Homily Clock, along with their daughter, Arrietty, belong to a race of tiny people called Borrowers. They used to live under the kitchen floor in an old country house, “borrowing” food to eat and trinkets to furnish their little burrow. In the first book, after befriending a human boy, they are discovered by the housekeeper and forced to flee to avoid extermination.
This story begins decades later, when the human boy’s older sister, Mrs. May, who previously found a diary left behind by Arrietty, is now elderly and living with some of her relatives, including a young girl named Kate. Mrs. May had heard her brother’s stories about the Borrowers and passed them on to Kate. When Mrs. May inherits a cottage near the country manor where the Borrowers used to live, she invites Kate to inspect it with her. Kate eagerly agrees, and they depart.
When they arrive at the cottage, they meet the old man who currently lives there, Tom Goodenough. With Tom’s permission, Mrs. May begins to inspect the cottage and its grounds. Kate, however, remains behind to talk to Tom. She discovers that he has met the Borrowers and that the Clocks lived in his house for a time. Arrietty would leave the recesses between the walls where she lived with her family to tell Tom about her life. Though Tom is initially reluctant to talk about the Borrowers, Kate persuades him to tell her all about the Clocks, picking up from when they fled the country house.
Initially the Borrowers simply ran away, putting as much distance between themselves and the large house as possible. They were able to escape with three small bags of belongings, which included a bit of food, a candle, cooking utensils, Pod’s tools and Arrietty’s diary. Arrietty’s Uncle Hendreary and his family are supposed to live in a badger set two fields over, so the Clocks resolve to find them. It’s a long, harrowing journey, but at last the Clocks reach the edge of the field.
Pod points out that Hendreary is likely well-hidden, and it might take days for the Clocks to find him, if they find him at all. The Clocks then begin to search for a semi-permanent shelter they can use while continuing to search for their family. Arrietty quickly discovers an old boot, which Homily is reluctant to enter until it starts raining. They take shelter in the boot for the night. The next day, Pod patches up the large hole in the toe and punches small holes around the rim so they can lace the opening shut before sleeping. They decide to drag the boot with them while they search so they will always have shelter nearby.
Homily and Arrietty discover a brook. After discussing what they found with Pod, the Clocks decide to create a more permanent camp close to the brook so they have easy access to water. They find an old stump with a small hollow underneath and are able to place the boot and all of their belongings in it.
Then they decide to search for the badger set, leaving all but their most essential belongings in the camp. It takes them all day to circle the field. When they return, half a scissor and a large hatpin are missing from their supplies. Pod worries that someone has stolen the items that could be used as weapons and the thief intends to attack them.
The next day, Arrietty fetches horsehair, which is caught high in a hedge, so Pod can make a fishing net. While she is climbing down, Arrietty sees another Borrower in the hedge — a boy who is quite young and very dirty. He introduces himself as Spiller and admits that he has been watching the Clock family for some time. Arrietty takes him back to meet Homily, and he captures a cricket along the way as a gift for the Clocks. Homily drives Spiller away, alarmed by both the cricket and his unkempt appearance.
Meanwhile, Pod continues to search for the badger set on his own. He finds the badger set, but it is now full of foxes. Hendreary and his family either moved away or were eaten. When Pod returns and hears that Spiller has been watching them, he pulls down a nearby branch and fastens it in front of their alcove so they are better hidden.
A few days later, Arrietty is playing down by the brook and doesn’t notice a large dog watching her. Spiller saves her from the beast by pushing her into his boat and sending her downstream to safety. Only then does he save himself.
Pod and Homily are extremely grateful, and Spiller begins to visit the Clocks’ home more frequently. He also confesses to stealing Pod’s tools. Spiller borrows from Gypsy caravans that often camp across the brook from the Clocks. He even borrowed the boot that the Clocks live in. A gypsy named Mild Eye threw it at a tomcat, and Spiller carried it away before Mild Eye could fetch it. Spiller begins to bring the Clocks food and other provisions. Then he goes on a trip one day and doesn’t return.
Winter arrives, and the Clocks run low on food. One night, the Clocks discover that all they have left is a small bottle of Elderberry wine. They drink it and go to sleep, forgetting to pull down the branch and lace up their boot. Arrietty awakes the next morning and realizes the boot is no longer in their alcove. She climbs out and discovers Mild Eye found the boot while rabbit hunting, and they are now in his caravan wagon.
Mild Eye picks up both of the boots. Noticing that one boot feels heavier, Mild Eye shakes Pod and Homily out onto the floor. They scurry under a cabinet, but not before Mild Eye sees them. Mild Eye’s wife calls him to come outside, giving Arrietty the opportunity to run to her parents. Mild Eye returns to find the Borrowers, and his cat awakens.
At this moment, a young Tom Goodenough appears in the door of the wagon, offering to help capture the Borrowers. Mild Eye wishes to cage and sell the Borrowers, so Tom suggests taking the cat outside where it can’t hurt them. While Mild Eye is outside, Tom instructs the Borrowers to climb into his pocket. Tom lifts Spiller out of his pocket, and they both help the family escape. Tom flees the wagon before Mild Eye can stop him.
When Tom arrives back at his home, he gently lifts the Borrowers out of his pocket and explains that several other Borrowers already live in the walls of the cottage. The Clocks venture into the walls where they see evidence of a Borrower home. When they reach the tiny living room, they find Hendreary and his family, even little Eggletina who was presumed eaten by a cat in the first book. After a tearful reunion and dinner, Arrietty goes back out to talk to Tom, and their friendship begins.