Susie Salmon, a fourteen year old girl, is raped and murdered on her way home from school. Her killer, a neighbour named George Harvey, is considered a harmless loner. Harvey shows no remorse for the killing, and heartlessly disposes of Susie's body in the equivalent of a rubbish dump.

Susie tells her story from the vantage point of an 'in between state', a limbo that is not quite earth or heaven. She recounts the aftermath of her own death and its impact on the lives of her family, friends and killer, exploring both the paranormal world and the human condition.

Susie's family struggles to come to terms with her death. Her mother, Abigail, is unable to express her grief and resorts to escapism. A detective named Len Fenerman leads the murder case but, to his distress, is unable to solve it. Susie's sister and father become convinced that Mr Harvey is guilty, and are frustrated when a lack of evidence means the case against him cannot be pursued; all seems lost when Mr Harvey quietly leaves the neighbourhood.

Both troubled souls, Len and Abigail begin a brief affair. Abigail then leaves her family and travels to California, where she can live an anonymous life and attempt to escape her misery. Susie's grandmother, a glamorous functioning alcoholic, comes to stay with the remaining family and helps them begin to live a normal life again.

Two of Susie's school friends, Ray Singh and Ruth Connors, are particularly affected by her death. Ray and Susie shared her only kiss on earth, and Ray is temporarily viewed as a suspect in her murder (perhaps due to racial prejudice). Ruth, an artistic and sensitive girl, is touched by Susie's spirit when she leaves the mortal world, and from then on becomes obsessed with Susie and the paranormal.

Susie is unable to let go of her life on earth, and over the years she lives vicariously through those left behind; in particular her sister Lindsay, whom she watches growing up, falling in love and becoming a successful young woman. When Susie's father suffers a heart attack, her mother returns to the family home. After initial difficulties, the family bonds begin to reform. The characters come to terms with their grief and begin to let go of a past that cannot be changed. Susie is soothed by the peace which she sees them begin to achieve.

Mr Harvey is never brought to justice by the police, but meets his end before he can claim any more lives.

Before she is able fully to move on, Susie returns to earth one last time, and her spirit enters Ruth's body. She makes love to Ray Singh, marking her emancipation from the past and her acceptance that she no longer has a future on earth. She is finally able to pass on to a true heaven, to be released from her damaging attachment to the living – to find peace.