Incident at Hawk's Hill opens in 1870, on Hawk's Hill, the farm of William and Esther MacDonald, set in the Canadian Prairies about twenty miles north of Winnipeg, Manitoba, Canada. The MacDonalds have four children. The first three are quite ordinary, but their fourth child, six-year-old Ben, is "the greatest problem of the MacDonald family". Highly intelligent but mute around most people, Ben especially loves his older brother John, but feels more comfortable with the wild animals on the farm than most people. The MacDonalds' new neighbor is George Burton, a cruel thief and bully who always travels with his mean dog, Lobo. Also in the vicinity is a huge female badger who is preparing tunnels and a sett or den, for the babies that will soon arrive.
One day, while following a prairie chicken, Ben wanders too far away from home and becomes lost. A late-afternoon storm drives him to shelter in a rock outcropping where he encounters the badger sow who is hiding there after being injured in one of Burton's traps. While she was trapped, her babies have died, so the mother badger brings food for Ben, and he begins imitating her movement and sounds, even sleeping during the day and following her as she hunts at night. One night when Lobo attacks the badger Ben defends her by biting Lobo's leg, distracting him and enabling the badger to kill him. Despite the badger's continued help, after two months it becomes apparent that Ben is starving.
The search for Ben lasts two months, with everyone except his family eventually deciding he must have drowned in the nearby Red River. But Ben's father vows to never stop looking, and the entire family hunts for him every day. When John finally discovers Ben among the rocks and reaches out for him, Ben fights like a wild animal, growling and biting his brother. John subdues Ben and takes him home. The mother badger follows, and eventually becomes uneasily accepted by the family as Ben's protector. Talking about his experiences leads Ben to become more comfortable with people, and he even begins looking forward to going to school. A show-down between Mr. MacDonald and George Burton over the badger finally unites Ben and his father. The story ends with the truth of Ben's adventure being re-interpreted by the locals as a parable of God's care for the lost, and by the First Nations as a tale bringing honor to their chief.