The four Pevensie children are waiting at a train station when a magical force pulls them into Narnia. They land at an overgrown castle which they recognise as Cair Paravel. Susan saves the life of a dwarf named Trumpkin who is about to be drowned by two soldiers on a boat. The children tell him that they are the old Kings and Queens of Narnia, of which Trumpkin has heard of in the Narnian legends. Trumpkin tells the children the story of Prince Caspian, nephew of the current monarch, King Miraz. Caspian lived in a great castle with King Miraz and his wife Queen Prunaprismia. He has a tutor called Dr. Cornelius who one night woke him up because the Queen had given birth to a baby; with a direct heir, Miraz no longer needs Caspian, and planned to kill him. Caspian escaped on a horse but fell from it in the woods and was taken in by Trumpkin, a badger called Trufflehunter and a black dwarf called Nikabrik. These are people who live in hiding, because King Miraz hates the Old Narnians; his ancestors defeated them in their invasion of Narnia hundreds of years earlier. The children travel through the woods with Trumpkin to meet Caspian.
That night, Lucy wakes up from sleep, hearing someone calling her name. She realises that it is Aslan, who instructs the others to follow him. The children meet Aslan the next morning at the Stone Table, and he takes them to meet the Old Narnians and Prince Caspian. Nikabrik summons a Hag and a Werewolf, intending to resurrect the White Witch so she can kill Miraz; when the children arrive, Nikabrik, the Hag, and the Werewolf are killed, but Caspian is wounded. Peter sends a letter of challenge to King Miraz and the guard who gave it to him is Glozelle, one of the King's courtiers who along with Sopespian has been conspiring against the King. Miraz then has an argument with his two courtiers, initially intending to refuse the challenge, but Glozelle and Sopespian trick him into accepting the offer. Peter fights Miraz and in the struggle he stabs him. Miraz lies wounded on the floor and Glozelle finishes him off by stabbing him in the back with a knife. A battle is bought briefly, during which Peter kills Glozelle. A brave mouse called Reepicheep has his tail cut off but Aslan restores it in recognition of his bravery. Aslan also names Caspian as the King of Narnia, and peace is restored between all Narnians. The four Pevensies return home, with Aslan telling them that Peter and Susan will not return, but Edmund and Lucy will.
When the story opens, it is explained that Peter is working at Professor Kirke's house, Susan has been invited to America for a holiday, and the younger two, Edmund and Lucy, are staying at their cousin Eustace Scrubb's home. Sitting in their temporary room, they both comment on a picture on the wall, how it resembles a Narnian ship. Eustace enters the room, and all three are sucked into the painting. On board the ship the Dawn Treader, Edmund and Lucy are reunited with Caspian who has grown into a young man since they last saw him. He explains that he is on a quest to find seven lords who were friends of his father's. The quest requires them to sail through dangerous waters, encountering new islands where things are not what they seem and finally to sail to the end of the world, hoping to reach Aslan's Land. The first island they encounter is one of the Lone Islands, where they are captured by slave traders, but are rescued the next day when Caspian and his army arrive at the market (having already deposed Governor Gumpus) and announce the abolition of slavery in Narnia. Caspian had already been bought by a man who introduced himself as Lord Bern (one of the missing lords).
They later find an isolated island which appears to be uninhabited. Eustace wanders off and finds a cave where a dragon has died. The cave is full of gold and jewellery, and Eustace finds a bracelet which he puts on. He is tired and soon falls asleep, but when he wakes up he soon realises that he has metamorphosised into a dragon. He flies back to the beach where the others confront him, and they soon figure out who he is. He is soon turned back into a human by Aslan. Caspian establishes that the bracelet was a possession of Lord Octesian, who must have perished on that island.
The third island (Caspian declares it "Goldwater Island," but Reepicheep proposes the more apt name of "Deathwater Island") where they find a cavern in which there is a pool. Edmund places his sword in the water to measure its depth, only for it to become heavy and fall in the water – causing it to splash over his shoes and produce splashes of gold. There is a body in the water, and they establish that anyone or anything that ends up in the water turns into gold. Caspian later realises that the body in the water is that of Lord Restimar. On the fourth island, they encounter some invisible creatures who give them dinner at a large house. A magician called Coriakin appears after Lucy reads from a magic book, and the creatures are soon made visible again.
The fifth and final island is at the end of the world. Before they ascend the island, they find a man in the water who introduced himself as Lord Rhoop. On the island they meet Ramandu and his daughter, and also find the three remaining Lords who are in an enchanted sleep. The three children eventually return home, and before leaving they know that Caspian will marry the daughter of Ramandu, who lives on an island at the end of the world, and that the four lords who were in a deep sleep on Ramandu's island will awaken. Aslan also told Edmund and Lucy that they will not return to Narnia since they are getting too old.