The book, written during the final period of World War II, takes places at an undetermined year "after the end of the war".
Mark Studdock is a young academic who has just become a Senior Fellow in sociology at Bracton College in the University of Edgestow. The fellows of Bracton are debating the sale of a portion of college land to the National Institute for Co-ordinated Experiments (N.I.C.E.), whose staff already includes some college faculty. The sale is controversial since the land in question (Bragdon Wood) is an ancient woodland believed to be the resting place of Merlin. After the deal is struck, an N.I.C.E. insider called Lord Feverstone proposes a possible post for Mark at the Institute. (It is gradually revealed that Feverstone is the new title of Richard Devine, who accompanied Professor Weston on the trip to Mars in the first volume of the series, but not in the one to Venus in the second volume.)
Mark's wife Jane (a PhD student at the university) has suffered a peculiar nightmare involving a severed head. She meets Mrs. Dimble, the wife of one of her former tutors, who is being evicted due to sale of land to the N.I.C.E. When Jane talks about her dreams, Mrs. Dimble leads her to seek counsel from a Miss Ironwood who lives in the Manor in the nearby town of St. Anne's. An argument between Jane and Mark shows how their marriage is deteriorating.
Lord Feverstone introduces Mark to the N.I.C.E., where he becomes acquainted with the top brass at their headquarters at Belbury, near Edgestow. Here and throughout his time with them, Mark can never find out what his place in the organisation is; he has no office or duties and seems to be alternately in and out of favour. A scientist named Bill Hingest, who is resigning from the N.I.C.E., warns Mark to get out. As he drives home that night, Hingest is mysteriously murdered.
At the same time, Jane works up the courage to visit Miss Ironwood at St. Anne's. Miss Ironwood, who is dressed in black just as Jane had dreamed of her, is convinced that Jane's dreams are not psychological but visions of genuine events. Later, Jane is introduced to Dr. Elwin Ransom, the protagonist of the first two books in Lewis' space trilogy. He has become the legitimate king or Pendragon of the nation of Logres, the heir of King Arthur and Director of the group living in the Manor at St. Anne's. He is in communication with the Oyéresu (singular "Oyarsa"), angelic beings who guide the planets of the Solar System and thus correspond to the Greek gods and goddesses. Earth has been in quarantine: its rebellious Oyarsa (who is the Devil) and his demons could not travel beyond the orbit of the Moon, and the other Oyéresu couldnot come to Earth.
Mark is finally given work: his main duty is to write pseudonymous newspaper articles supporting the N.I.C.E., including two for use after a riot they intend to provoke in Edgestow. The riot takes place as planned, allowing the N.I.C.E.'s private police force to take over the town. They arrest Jane, whom the N.I.C.E. are interested in (as revealed later) for her psychic abilities, which they fear will get into their opponents' hands. The head of the N.I.C.E. police, a woman known as "Fairy" Hardcastle, starts to torture Jane but is forced to release her when rioters turn in her direction.
Mark is once again out of favour in the N.I.C.E., but after a conversation with an Italian scientist named Filostrato he is introduced to the Head of the Institute. This turns out to be a literal head– that of a recently guillotined French scientist (as Jane dreamed) which Filostrato erroneously believes he has restored to life by his own efforts.
From Jane's dreams that people were digging up the grave of a long-buried man and that the man had left, Ransom concludes that the N.I.C.E. is looking for the body of Merlin, who truly is buried in Bragdon Wood, though not dead but in a timeless state. Jane will guide members of the group to the place she dreamed of.
The N.I.C.E. bosses now try to strengthen their hold over Mark by showing him trumped-up evidence that he murdered Bill Hingest. This however backfires, as the moment of crisis finally gives Mark the courage to leave Belbury. He returns to Edgestow in search of Jane only to find their apartment empty and the town under N.I.C.E. control. Later he meets Cecil Dimble, one of the St. Anne's community, who despite his misgivings offers to help him. Unfortunately Mark deliberates too long over Dimble's proposal and he is found and arrested for Hingest's murder.
That night, during a heavy storm, both the company of St. Anne's and N.I.C.E. personnel are on the trail of Merlin, who has apparently revived. He has taken the clothes of a tramp through his powers of hypnosis and acquired a wild horse. He meets the company of St. Anne's but rides away. Members of the N.I.C.E. capture the tramp, believing him to be Merlin.
Mark, while contemplating his upcoming trial and execution, discovers that he has not been arrested by the real police but by officials of the N.I.C.E. who (he now guesses) are the true murderers of Hingest. Much to his surprise he is now told that he is to be initiated into the group's inner ring. In preparation for this he begins a bizarre program of training intended to cultivate absolute objectivity by relegating emotion to the status of a chemical phenomenon. He outwardly participates in these rituals (knowing that he will otherwise be killed) but inwardly begins to reject everything the N.I.C.E. stands for.
Merlin arrives at St. Anne's ahead of his pursuers, where he and Ransom converse in broken Latin. Ransom reveals that there are Satanic forces behind the N.I.C.E. and that Merlin is to be possessed by the Oyéresu; since the forces of darkness broke the lunar barrier in the earlier books, the heavenly beings may also cross the barrier and intervene in human affairs. Jane then has two mystical experiences; the first with the earth-bound counterpart of the Oyarsa of Venus, and the second with God. Afterdiscussions with Mrs. Dimble and the Director, she becomes a Christian.
Merlin, now possessed by the Oyéresu, disguises himself as a Basque priest and answers the N.I.C.E.'s advertisement for an interpreter of ancient languages. He hypnotises and interviews the tramp (whom the N.I.C.E. still believe may be the real Merlin) and the two of them are brought to a banquet. There Merlin pronounces the curse of Babel upon the assembled N.I.C.E. leaders, causing all present to speak gibberish, and also liberates the many animals on which the N.I.C.E. were experimenting. The bigger animals kill most of the N.I.C.E. staff.
As earthquakes destroy the building, Lord Feverstone flees to Edgestow but is killed when that too is engulfed. Merlin helps Mark escape and sends him to St. Anne's. The Oyarsa of Venus lingers at the Manor, as Ransom is now to be transported back to that planet. When Mark arrives, a vision of Venus leads him into a bridal chamber that Jane has been preparing for him.