The Secret History is narrated by twenty-eight year old Richard Papen, who looks back on his time as an undergraduate to recount "the only story I will ever be able to tell." The prologue reveals that Richard was part of a group of students who murdered a friend, Bunny Corcoran.

Aged nineteen, Richard leaves a rather lacklustre life in Plano, California for the prestigious Hampden College in Vermont. He soon persuades the elusive Julian Morrow to let him join his exclusive Ancient Greek class. Richard befriends his classmates, a small, affluent and eccentric group he has admired from the moment he arrived at Hampden.

Henry Winter is the group’s natural leader, grand in stature and manner, and fiercely intelligent. He rules over Francis Abernathy, gay and immaculately dressed; beautiful twins Charles and Camilla Macaulay; and brash, abrasive Bunny Corcoran. Richard soon becomes a part of the group, spending time in Francis's country house, an idyllic rural setting where the friends drink, debate and play croquet.

Over Christmas Richard decides to stay at Hampden College, living with a tightfisted hippy in a freezing warehouse, and sleeping under bare rafters. Richard spends his days working for his professor, trying to keep warm, but soon ends up seriously ill with pneumonia. One day, after work, he slips in the snow and concusses himself. Henry discovers him as he struggles back to the warehouse and takes him to hospital, saving his life. Henry has just returned from a disastrous Christmas holiday with Bunny in Rome.

However, after the Christmas break, Richard becomes increasingly suspicious of his friends' behaviour. He accidentally discovers that Henry has booked four one-way tickets to Argentina. Henry realises that Richard has discovered their plan to leave the country and makes a shocking confession: while at Francis's country house, Henry, Francis and the twins enacted a Dionysian bacchanal – an ancient, wild ritual designed to release people from the 'burden of the self' – during which they unintentionally killed a farmer. Although Bunny was not involved, he happened to see them when they returned to Hampden, covered in human blood; he has been tormenting them ever since, extracting large sums of money from Henry and threatening to reveal their secret. The group had attempted to flee to Argentina, but lack of funds forced them to abandon this plan.

Richard's knowledge draws him closer to the others, while Bunny becomes increasingly cruel and manipulative. After a drunken Bunny tells Richard about the murder (not realising he already knows), Henry decides to take drastic action: they must get rid of Bunny before he tells anyone else.

After dismissing a variety of murderous plans, Henry decides that they should push Bunny down a ravine in the mountains. The group pretend they are picking ferns and meet him there, as though by chance, on his usual Sunday walk. After a brief conversation, Henry pushes Bunny into the ravine, making it look like a tragic accident. However, on the evening of the murder, a late snowfall covers Bunny's body, and it is not discovered for ten days.

Once Bunny is found to be missing, a manhunt is launched, with the FBI, local police, students from Hampden and local Vermont residents all searching for him. This unexpected development puts enormous pressure on Richard and the others, as strange rumours begin to circulate about Bunny's disappearance. However, just as the FBI start to ask difficult questions of Henry and Charles, Bunny's body is found and his death is presumed to be an accident.

The group travel to the Corcoran family home for his funeral. Tensions build between them; Bunny’s death has not freed the friends as they expected. Francis suffers panic attacks and makes a pass at Richard; Charles begins drinking more and more, and a fight breaks out between the twins. Soon Richard finds out that Camilla and Henry are in love; Charles, who has had an intimate, incestuous relationship with his twin, is driven violently mad with jealousy. Charles' drinking worsens until he ends up in hospital. Richard and Francis take him to the country house to recover. 

After finding a letter from Bunny recounting the farmer's murder, Julian flees Hampden College, horrified. Henry is devastated by the weakness and the betrayal, as he sees it, of his mentor. The group continues to war. Charles escapes from the country house and returns to Hampden with a gun. He manages to shoot Richard in the stomach before Henry takes the gun and, in a drastic and devastating split second, shoots himself with it.

In the epilogue, Richard recounts what happened after this event:

Camilla moves home to look after her grandma, but she is mourning for Henry and declines Richard's declaration of love. Charles runs away with an older woman and leads a dissolute life with her. Francis is forced to marry a woman despite being homosexual, and tries unsuccessfully to commit suicide. Richard becomes a postgraduate student, studying Jacobean revenge drama. The novel ends with Richard recalling a dream he had about Henry.