At the beginning of the book, Rand al'Thor has just claimed the crystal sword Callandor to prove himself the Dragon Reborn. He is approached by Lanfear; and the fortress 'Stone of Tear' is stormed by Trollocs and Fades, sent by another Forsaken (Sammael), while a third, Semirhage, sends her followers into the Stone, to oppose Sammael's forces. In defense, Rand uses Callandor to create a lightning storm killing all the Trollocs and Fades.
Rand then departs for the Aiel Waste, to which Egwene al'Vere and Moiraine Damodred accompany him. Mat Cauthon, counseled by the Stone of Tear's Aelfinn ter'angreal , follows Rand. Perrin Aybara, after hearing of trouble in Two Rivers, his native region, returns thereto, accompanied by Faile Bashere. Elayne Trakand, Nynaeve al'Meara, and Thom Merrilin depart to Tarabon to hunt the Black Ajah, while Min Farshaw arrives in Tar Valon to report to the Amyrlin Siuan Sanche. Thus, The Shadow Rising follows four groups of characters in four plotlines.
Rand teleports Mat, Egwene, Moiraine, and the Aiel at the Stone of Tear from Tear to the Aiel Waste, where Taardad and Shaido Aiel are waiting for them. Moiraine, Aviendha (a former 'maiden of the spear' seeking to become a Wise One), Mat, and Rand enter Rhuidean. All three enter ter'angreal in Rhuidean. Rand there relives portions of the lives of his paternal ancestors, before and after the Breaking, and learns that the Aiel once shunned violence and served Aes Sedai, whereof some, adhering to pacifism, live on as Tinkers, while others known as the 'Jenn Aiel', carried a large collection of angreal , sa'angreal , and ter'angreal (ancient psychokinetic technologies) to Rhuidean. Rand emerges with dragon markings on both arms; thus proving himself the Car'a'carn : the 'Chief of Chiefs' of the Aiel.
Mat enters a ter'angreal similar to the one he entered in Tear, seeking answers to the questions he asked of the Snakelike 'Aelfinn' of his previous visit; but encounters the Foxlike 'Eelfinn', who bargain for gifts instead of answering questions (he later speculates that the two factions are namesake for the children's game of 'Snakes and Foxes', which cannot be won), and acquires fluency in the Old Tongue and the memories of his own ancestors. He is also given a spear called an ashandarei and a medallion ter'angreal that protects against the One Power. Rand finds Mat hanged from the Tree of Life as the price for these gifts; but revives Mat, who thereafter wears a black scarf to hide the resulting scars. Moiraine having visited the three-hooped ter'angreal used by the Wise Ones, gains some knowledge of the future.
The Wise Ones assign Aviendha the task of teaching Rand Aiel customs as they travel to Cold Rocks Hold; they are later accompanied by merchants. At Al'cair Dal , both Rand al'Thor and Couladin of the Shaido Aiel declare themselves the messiah 'He Who Comes With the Dawn'. Rand reveals the secret history of the Aiel in the Age of Legends to prove his claim; whereupon an uproar breaks out among the Aiel, and, to avert violence, Rand uses the One Power to bring a rainstorm to the Aiel Waste. After fighting breaks out among the Aiel, Rand pursues Asmodean, a Forsaken in search of the ter'angreal access keys to the Choedan Kal, the most powerful sa'angreal created. At Rhuidean, Rand defeats Asmodean by cutting him off from the Dark One. Lanfear allows Rand to live and then limits Asmodean's access to the One Power, on grounds that Asmodean teach Rand to use the One Power (which only a male Forsaken can). When Rand returns to Al'cair Dal, he finds that most of the Aiel have acknowledged him as the Car'a'carn .
In the Two Rivers, Perrin discovers that the people are caught between Trollocs, led by Slayer, and the Children of the Light. He also finds Verin Mathwin and Alanna Mosvani, both Aes Sedai, searching for potential pupils. With the help of Tam al'Thor (Rand's adoptive father) and Abell Cauthon (the father of Mat), Perrin leads the people against the Trollocs, and earns the nicknames 'Lord Perrin' and 'Perrin Goldeneyes' (the latter representing his telepathic communion with wolves). Before the final victory, Perrin marries Faile and then asks her to go to Caemlyn to ask Queen Morgase to send soldiers to help fight. The Children of the Light, led by Dain Bornhald, demand Perrin's arrest to try him for the murders of Children previously, and Perrin agrees to give himself up, if the Children will help the Two Rivers when the Trollocs attack. When it's discovered the Children did nothing during the attack, Perrin and the townspeople, along with fighters from Devin Ride, Watch Hill and a returned Faille, force the Children to leave.
In the city of Tanchico in Tarabon, Elayne and Nynaeve encounter Moghedien and the Black Ajah and remove a male a'dam from their possession. Elayne and Nynaeve also meet Bayle Domon and the Seanchan Egeanin. They 'befriend' the Panarch Amathera, whom they rescue from Temaile, and collect one of the Seals of the Dark One's prison. In opposition, Nynaeve and Moghedien discover that they are equal in power. Nynaeve shields the Forsaken, but they are discovered by one of the Black Ajah, who damages the palace using a ter'angreal that makes balefire. In the confusion, Moghedien escapes.
Min Farshaw arrives at the White Tower to report to the Amyrlin. Thereafter Min remains in the Tower in the guise of Elmindreda: a giddy, empty-headed woman unable to decide between two suitors. Elaida and her supporters thereafter depose Siuan Sanche (the Amyrlin Seat) and Leane Sharif, her Keeper of the Chronicles; whereupon Elaida herself is made Amyrlin and many Aes Sedai flee. Siuan and Leane are both 'Stilled' (their ability to channel the One Power removed) with the side effect of removing their ageless appearance, returning them to the visible age at which they first began to channel. Min frees Siuan and Leane, and all three are assisted in escape by Gawyn Trakand. In departure, they acquire Logain, a former false claimer to the title of the Dragon Reborn, who has been "Gentled" (the male equivalent of 'Stilling).