At the start of the book, it is spring time: the weather is fine, and good-natured Mole loses patience with spring cleaning. He flees his underground home, heading up to take in the air. He ends up at the river, which he has never seen before. Here he meets Ratty (a water rat), who at this time of year spends all his days in, on and close by the river. Rat takes Mole for a ride in his rowing boat. They get along well and spend many more days boating, with Rat teaching Mole the ways of the river. One summer day shortly thereafter, Rat and Mole find themselves near the grand Toad Hall and pay a visit to Toad.
Toad is rich (having inherited wealth from his father): jovial, friendly and kind-hearted but aimless and conceited, he regularly becomes obsessed with current fads, only to abandon them as quickly as he took them up. Having only recently given up boating, Toad’s current craze is his horse-drawn caravan. In fact, he is about to go on a trip, and persuades the reluctant Rat and willing Mole to join him. The following day (after Toad has already tired of the realities of camp life and sleeps-in to avoid chores), a passing motor car scares the horse, causing the caravan to overturn into a ditch.
Rat does a war dance and threatens to have the law on the motor car drivers, but this marks the immediate end of Toad’s craze for caravan travel, to be replaced with an obsession for motor cars. When the three animals get to the nearest town, they have Toad go to the police station to make a complaint against the vandals and their motor car and thence to a blacksmith to retrieve and mend the caravan. Toad – in thrall to the experience of his encounter – refuses. Rat and Mole find an inn from where they organise the necessary steps and, exhausted, return home by train.
Meanwhile, Toad makes no effort to help, instead deciding to order himself a motor car. Mole wants to meet the respected but elusive Badger, who lives deep in the Wild Wood, but Rat – knowing that Badger does not appreciate visits – refuses to take him, telling Mole to be patient and wait and Badger will pay them a visit himself. Nevertheless, on a snowy winter’s day, whilst the seasonally somnolent Ratty dozes unaware, Mole impulsively goes to the Wild Wood to explore, hoping to meet Badger.
He gets lost in the woods, sees many “evil faces” among the wood’s less-welcoming denizens, succumbs to fright and panic and hides, trying to stay warm, amongst the sheltering roots of a tree. Rat, upon awakening and finding Mole gone, guesses his mission from the direction of Mole’s tracks and, equipping himself with a pistol and a stout stick, goes in search, finding him as snow begins to fall in earnest. Attempting to find their way home, Rat and Mole quite literally stumble across Badger’s home — Mole barks his shin upon the boot scraper on Badger’s doorstep.
Rat finds it and a doormat, knowing they are an obvious sign of hope, but Mole thinks Rat has gone crazy, only to believe him when the digging reveals a door. Badger – en-route to bed in his dressing-gown and slippers – nonetheless warmly welcomes Rat and Mole to his large and cosy underground home and hastens to give them hot food and dry clothes. Badger learns from his visitors that Toad has crashed six cars, has been hospitalised three times, and has spent a fortune on fines.
Though nothing can be done at the moment (it being winter), they resolve that once spring arrives they will make a plan to protect Toad from himself; they are, after all, his friends and are worried for his well-being. With the arrival of spring, Badger visits Mole and Rat to do something about Toad’s self-destructive obsession. The three of them go to visit Toad, and Badger tries talking him out of his behaviour, to no avail. They decide to put Toad under house arrest, with themselves as the guards, until Toad changes his mind. Feigning illness, Toad bamboozles the Water Rat (who is on guard duty at the time) and escapes.
He steals a car, drives it recklessly and is caught by the police. He is sent to prison on a twenty-year sentence. Badger and Mole are cross with Rat for his gullibility but draw comfort from the fact that they need no longer waste their summer guarding Toad. However, Badger and Mole continue to live in Toad Hall in the hope that Toad may return. Meanwhile in prison, Toad gains the sympathy of the Jailer’s Daughter who helps him to escape disguised as a washerwoman. Though free again, Toad is without money or possessions other than the clothes upon his back, and is being pursued by the police.
Still disguised as a washerwoman, and after hitchhiking a lift on a train, Toad comes across a horse-drawn barge. The Barge’s Owner offers him a lift in exchange for Toad’s services as a “washer woman”. After botching the wash, Toad gets into a fight with the barge-woman, who deliberately tosses him in the canal. After making off with the barge horse, which he then sells to a gypsy, Toad flags down a passing car, which happens to be the very one which he stole earlier. The car owners, not recognizing Toad disguised as a washer woman, permit him to drive their car.
Once behind the wheel, he is repossessed by his former passion and drives furiously, declaring his true identity to the outraged passengers who try to seize him. This leads to an accident, after which Toad flees once more. Pursued by police he runs accidentally into a river, which carries him by sheer chance to the house of the Water Rat. Toad now hears from Rat that Toad Hall has been taken over by weasels, stoats and ferrets from the Wild Wood, who have driven out its former custodians, Mole and Badger. Although upset at the loss of his house, Toad realises what good friends he has and how badly he has behaved.
Badger then arrives and announces that he knows of a secret tunnel into Toad Hall through which the enemies may be attacked. Armed to the teeth, Rat, Mole and Toad enter via the tunnel and pounce upon the unsuspecting weasels who are holding a party in honour of their leader. Having driven away the intruders, Toad holds a banquet to mark his return, during which (for a change) he behaves both quietly and humbly. He makes up for his earlier wrongdoings by seeking out and compensating those he has wronged, and the four friends live out their lives happily ever after.