The novel opens with the scene of a writer living in a sort of gray, unpleasant city (Hell), standing in a long queue. Eventually it is revealed that they’re waiting for a bus going up to Heaven, which comes and allows them all entry with plenty of room left over. The bus starts and begins to ascend, rising in the air in a manner quite unlike a bus. On the way up, several minor characters speak to the narrator, including a curly-haired young poet, a man who believes the universe conspires against him, an intelligent man in a bowler hat, and a big belligerent man with little respect for anyone.
The bus arrives in Heaven. The passengers disembark, finding that they are no more than shades, translucent ghosts inhabiting the world of the living. The world itself, moreover, is fuller and more real than they could have imagined, and its substance is so solid that the Ghosts find it nearly immovable; the grass is painful to tread, and flowers are as hard as diamonds. The narrator isn’t even able to pick up a leaf, which seems to possess an extraordinary weight. The Driver tells the Ghosts that they may stay as long as they wish - even forever, if they so choose. Faced with their own significance, many of them panic and reboard the bus, ready to return home.
Soon a large number of Spirits comes from deeper heaven to talk with the Ghosts, some of which are clothed and some naked, but all glowing with a divine radiance and fullness. What follows is a series of encounters between Ghosts and Spirits, in which the latter attempt to persuade the former to remain here in Heaven. The first such scene is between the Big Man and a young male spirit he knows from his life on Earth, a fellow who murdered someone else and yet is present in Heaven, something the Big Man can’t come to grips with, and he leaves in a huff of rage. Another encounter involves an intelligent academic and another bright young spirit; in this scene, the Ghost talks of spirituality and the afterlife with a sort of dissociated mentality, and the Spirit is unable to convince him that he is currently standing in Heaven.
Growing curious, the narrator walks up a river (as the water is so dense for him as to be solid) to find a clearing with a giant waterfall and a glorious tree with apples surrounding it. The bowler-hatted Ghost is there, trying to pick up an apple and lug it back to Hell to be sold for a profit. Eventually he succeeds in picking one up and staggers off despite the voice of the waterfall-angel telling him to put it down.
After a few more scenes with Ghosts and Spirits, the narrator comes across the Spirit of George MacDonald, a Scottish fairy-tale writer and theologian whom Lewis greatly admired. For the rest of the book, MacDonald explains to Lewis the nature of the place. Heaven isn’t merely above Hell; it’s infinitely larger, and Hell is just a nonexistent point of space somewhere along the way. All of Hell, MacDonald says, could fit in a single atom of Heaven. They also watch a series of further Ghost/Spirit interactions, a notable example of which is the man with the lizard on his shoulder. He listens to what the horrid creature whispers into his ear while an angel attempts to solicit his permission to kill it. Eventually the man acquiesces, and the angel kills the creature, causing the man great pain, but he becomes free and joyful, transforming into something beyond himself and taking off in the direction of deeper heaven.
They also watch as a glorious procession comes out of the woods, leading and celebrating a glorious figure. Lewis expects her to be someone famous, but she is in fact a humble woman named Sarah Smith who was unrecognized on Earth. They watch as she reunites with her former husband, Frank, who has allowed himself to devolve into a Ghost resembling a dwarf holding a tall, thin creature on a chain (the Tragedian). Frank refuses to repent, and he shrivels into nothing and disappears.
At the end of the story, the narrator watches as the Sun comes over the horizon, and while MacDonald welcomes the brightness with a smile, the narrator screams in pain and is overcome by the Light of Goodness (Jesus). He falls out of his chair in his real-world study, where it seems he has fallen asleep.
