Shame takes place in the city of Q, a fictionalized version of Quetta, Pakistan. The novel begins with the description of three sisters named Chunnee, Munnee, and Bunny. After a lavish party held in their mansion, Nishapur, one of the sisters becomes pregnant. All three sisters act as though they are pregnant in order to conceal the true identity of the mother. They have a son and name him Omar. They do not reveal to him which one of them is his birth mother and raise him together. They also withhold the identity of his father.
He eventually grows up and leaves home, but before they let him go they make him promise to lead a life without shame. He goes to school and becomes an immunologist. He leads a selfish and debauched life, seeming unaffected by the feeling of shame. In this time he becomes friends with a man named Iskander Harappa. They have a number of wild adventures together before Iskander eventually settles down and marries a woman named Rani. They have a daughter named Arjumand, who is set on achieving greatness and not being held back by societal expectations of women.
Iskander later becomes involved in Peccavistani politics and develops a rivalry with Raza Hyder, a general. The novel then delves into Raza's life, describing his marriage to a woman named Bilquis, and his relationship with his two daughters, Sufiya and Naveed, nicknamed "Good News." Sufiya grows ill and suffers a setback in her development. She maintains the mentality of a child even as she ages. Eventually she starts to absorb the shame in the world around her, as a result of her parents both feeling ashamed of her very existence.
The narrator describes this shame manifesting as a "beast" inside of her. The beast grows increasingly powerful and eventually starts to take over her body completely. The family begins to take her condition more seriously after she goes on a rampage, killing two hundred turkeys, viciously ripping their heads from their bodies. Omar, now a doctor, treats her condition and develops a romantic attachment to her, despite her age and illness.
Naveed marries a young man named Talvar Ulhaq, despite being promised to Haroun Harappa. At the wedding, Sufiya flies into a frenzy, attacks Talvar, bites his neck, and nearly rips his head from his body. Omar marries Sufiya in a small ceremony. Omar isn't allowed to have sexual relations with Sufiya and instead becomes involved with Shahbanou, Sufiya's nurse. Sufiya overhears the two of them and realizes that despite being married to Omar, she is not able to fulfill her role as his wife.
Sufiya is then taken over by the beast and goes out into the countryside where she has sex with four boys before tearing off their heads. Raza learns of what has occurred and decides to keep Sufiya hidden away in their attic. Omar sedates her with daily injections. Eventually, Sufiya grows too powerful and escapes her confinement. She transforms into a panther with a white body and black head. She is regarded as a mythic terror throughout the country.
Iskander takes power and establishes a strict dictatorship. However, he is overthrown by Raza and later executed. Raza, in turn, is toppled from power and narrowly escapes being captured by a mob by dressing like a woman. He lives in fear of being captured by his daughter. He turns up at Nishapur, where he initially believes he is safe but is quickly proven wrong.
Raza is murdered by Omar's mothers in an act of revenge for their other son Babar, who died while fighting in a rebel army. Omar is also killed when Sufiya arrives at his home and decapitates him. She subsequently dies in a massive fire.
