The novel begins with the horrific discovery of a secret burial ground containing the bodies of young boys. The bodies were buried on the site of a now-defunct reform school, Nickel Academy. The discovery leads to a media frenzy, which focuses on the present-day group of surviving former students, dubbed the "Nickel Boys." An investigation into the school begins and the abuse that occurred at the school is brought to light as survivors speak out. News of the discovery travels to Elwood Curtis, a Nickel Boy who lives in New York.
After the prologue, the narrative jumps between the present-day and the past, with both plotlines focused on Elwood Curtis. The flashbacks, set in 1960, introduce Elwood as an honest, morally-conscientious boy growing up in Jim Crow-era Tallahassee, Florida. Abandoned by his parents, Elwood is raised by his grandmother, Harriet. He spends much of his childhood enduring prejudiced and racist treatment in his town, beginning with his job at the hotel where his grandmother also works, and continuing at the tobacco shop where he subsequently works. Elwood is a talented student and one of his high school teachers, Mr. Hill, recommends that he takes classes at a black community college nearby. Elwood attempts to hitchhike in order to get to his classes but fails to do so after the vehicle he is in is pulled over. Elwood is falsely convicted for the theft of the vehicle—the car was stolen—and he is then sent to Nickel Academy.
At Nickel Academy, Elwood experiences a variety of traumatic experiences and abuse. There is little education there, despite the institution's supposed status as a "school"; instead, the boys perform manual labor from which the school's administrators profit. They are arbitrarily punished with severe beatings that occur in a shed behind the school that the boys dub the "Ice Cream Factory" or the "White House." Highly segregated, the white and the black boys receive differing levels of punishment, and it is the black boys who are often beaten so violently that they need to lie in the hospital for weeks. Sometimes, boys are taken "out back," which means that they are killed in secret and never return. Although he is highly alienated from the rest of the boys due to his moral values and desire for justice, Elwood manages to befriend Jack Turner (known simply as "Turner"), whose personality contrasts with Elwood's and who is cynical, jaded, and pessimistic.
Elwood endures severe abuse at Nickel, receiving crippling beatings and being forced to work for the school and its corrupt moneymaking schemes. Propelled by his admiration of Dr. Martin Luther King Jr., Elwood continues to try and expose Nickel Academy's abuse and bring attention to it by writing to newspapers, detailing the various crimes of Nickel. After a letter that he attempts to sneak into a state inspector's hands is discovered, Elwood is brutally beaten and imprisoned in solitary confinement. Turner finds him and the boys attempt to escape together. As they run, Elwood is shot in the back; Turner, upon getting to safety, realizes that the only way he can survive is to adopt Elwood's name and identity. It is revealed that the parts of the novel that were set in the present day and that concerned "Elwood" were actually about Turner.
After learning more about the investigation into Nickel, Turner realizes that it is only the white boys whose voices are being heard. He decides to return to Florida for the first time in decades in order to give Elwood a proper burial and speak for the black boys who were killed and/or abused at the hands of Nickel Academy.
