As the story opens, Raphael enters a gaming house and loses the last of his money. He decides to drown himself in the Seine. As he waits for the crowds to leave the evening streets, he wanders into an antique shop, where he tells the shop keeper that he is going to kill himself and the man shows him a mysterious-looking skin hanging on a wall. It is inscribed with a message in "Sanskrit" that one who owns the skin will have any wish granted, but that each wish will cause the skin to shrink. When the skin disappears, its owner dies.

Raphael brashly decides to take the skin. He wishes for a rich dinner, a fortune, and women. As he leaves the shop, he is stopped by friends who invite him to a dinner. Raphael tells his history. He is the son of a fairly wealthy man, but he squandered his fortune. He has spent the last three years studying in a garret and trying to win the love of Foedora, a cold society woman. His garret was warmed by the friendship of Paulina, his landlady’s daughter.

As the dinner party ends, Raphael receives word that he has inherited a vast fortune. His wishes are coming true and the skin is shrinking. Raphael now clings to life and arranges it so that his servants supply his wants before he even realizes them. One evening, he encounters Paulina; she too has inherited money and he is struck by her maturing beauty. Foedora seems ugly next to Paulina’s purity. Raphael wishes that Paulina will love him. They marry, but the skin continues to shrink.

Doctors are called to treat Raphael as his health fails and they argue over whether his disease is caused by his mind or whether his mental obsession is caused by a physical disturbance. They cannot resolve the dispute, but as their patient is a millionaire they decide to treat him anyway. They suggest applying leeches and traveling to "take the waters."

Raphael does travel and at one point duels with another young man. He warns his enemy to ask his forgiveness for otherwise, Raphael’s bullet is bound to kill him while the others’ bullet will surely miss. The other refuses and Raphael, though he shoots randomly, kills him. He takes refuge in a country cottage, but still has desires which the skin satisfies without Raphael’s conscious intention.

He returns home to Paulina and tells her about the skin. Knowing he is going to die, he indulges in a final burst of passion for her. She sees that such desire will kill him and tries to kill herself to spare him, but fails. Raphael dies.