Sophie is the oldest of three sisters, and so she believes she is destined to live a boring, normal life. After her father passes away, she begins to take over a hat shop, talking to the hats and, without her knowledge, magically imbuing them with whatever words she speaks to them. Her two younger sisters, Lettie and Martha, are sent away to apprentice with others. They secretly switch places, and Lettie ends up learning magic, and Martha ends up at the local bakery.

The Witch of the Waste enters the hat shop, and thinking Sophie is Lettie, turns her into an old woman. Sophie is thus forced to leave and seek her own fortune. She comes across Howl's moving castle, and forces her way in. Inside she finds Michael, Howl's apprentice, and Calcifer, a fire demon living on the grate. Calcifer says she can stay if he will help him break the contract he has with Howl. He can't tell her how to break it.

On the way to the castle, she helped a dog, and talked life into a scarecrow, which proceeded to follow her. Sophie cleans the castle, while Howl attempts to woo a girl (it is Lettie). Michael is courting Martha (who still goes by Lettie). Howl's advances are not succeeding, and he pouts. Sophie tries to leave, but the scarecrow is there and she is too scared to. She also finds out that the door can lead to any of 4 places.

Michael attempts a spell, but it makes no sense. Later, Howl sees it and realizes it is not a spell. He takes Michael and Sophie with him through the door black down, and they go to the real Wales. There, we meet Howl's (or Howell) sister and her children, as well as miss Angorian, a teacher. She has the lost spell, which was swapped with an old English poem.

Howl sends Sophie to the King to blacken his name so Howl won't have to go rescue the king's brother and wizard Sulliman, both who have been captured by the Witch. Sophie's efforts fail, and the King is even more convinced Howl is the man for the job.

The Witch catches up with Howl, and there is a great battle. Howl survives, but he proceeds to move the castle so it goes to different houses now (but still to Wales). Howl repeatedly goes to Wales to court Miss Angorian, which begins to make Sophie jealous. The scarecrow reappears, and Sophie tells it to leave, and go ten times faster. It does so. Miss Angorian enters the castle, but Sophie drives her away. Later, her sisters, mother-in-law, and friends all show up. The scarecrow appears again, makes it inside, and absorbs the skull in Howl's castle, which we learn belonged to Prince Justin. The scarecrow is actually a golem Wizard Sulliman made to find all the pieces of his body the Witch took from him. Miss Angorian leaves, but then the Witch delivers a message that she has captured Angorian. Sophie leaves to rescue her from the witch.

Using seven-league boots she finds the Witch's lair, where she confronts the witch. The scarecrow arrives to find the rest of Prince Justin and Wizard Sulliman, who have been combined to make the perfect man. Howl's head is meant to be the last peace. Howl defeats the Witch, but her fire demon still lives. Miss Angorian was actually the Witch's fire demon. She is defeated. Sophie breaks the contract between Howl and Calcifer by taking Howl's hear from Calcifer, telling him he will live another thousand years, and returning the heart to Howl.

Sulliman (the dog Sophie rescued) and Justin are returned to normal. Lettie becomes Sulliman's apprentice. Calcifer is free to come and go as he pleases, but he returns to Howl's castle. The book ends with Sophie and Howl discussing their love for each other, while everyone else tries to speak to them about everything that just happened. Sophie returns to her normal self, and we learn that she was much of the reason she staid old for so long.