This first novel is written in English by a native Indian who makes her home in India. It is the tale of Esthappen (Estha for short) and his fraternal twin sister, Rahel, and their divorced mother, Ammu, who live in the south Indian state of Kerala. Ammu, a Syrian Christian, has had no choice but to return to her parental home, following her divorce from the Hindu man she had married--the father of Estha and Rahel.

The story centers on events surrounding the visit and drowning death of the twins' half-English cousin, a nine year old girl named Sophie Mol. The visit overlaps with a love affair between Ammu and the family's carpenter, Velutha, a member of the Untouchable caste--"The God of Loss / The God of Small Things." (p. 274)

Told from the children's perspective, the novel moves backward from present-day India to the fateful drowning that took place twenty-three years earlier, in 1969. The consequences of these intertwined events--the drowning and the forbidden love affair--are dire. Estha at some point thereafter stops speaking; Ammu is banished from her home, dying miserably and alone at age 31; Rahel is expelled from school, drifts, marries an American, whom she later leaves. The narrative begins and ends as Rahel returns to her family home in India and to Estha, where there is some hope that their love for each other and memories recollected from a distance will heal their deep wounds.