The story begins with Bluebird giving birth silently and alone to a baby girl while her husband’s camp-circle is on the move. She names the baby Waterlily after being overwhelmed by the beauty of waterlily in a nearby body of water. Bluebird returns to the camp where she is taken care of by her cousin. Bluebird then recalls her childhood at age 14 when she lost her family. She had accompanied her grandmother to go and gather beans and firewood, and upon their return, they realize that their campsite has been attacked. They travel to a nearby camp-circle where they are adopted.
Star Elk, one of the young men of the tribe, proposes to Bluebird, and she gives him her word that she will marry him. The couple elopes, which was not an entirely honorable way to enter marriage, but since he did not dishonor Bluebird their marriage is considered acceptable. Bluebird gains recognition in the tribe as an honorable woman and is accepted by Star Elk’s family, but Star Elk proves to be a lazy, rude, and inattentive husband. Bluebird’s flashback ends and she is content with her baby. However, Star Elk continues to be a difficult and jealous husband. He attempts to shame Bluebird by “throwing her away” publicly, but instead he loses his own prestige because Bluebird had proven herself as a respectable woman.
Shortly after Star Elk’s attempt to shame Bluebird, visitors arrive from a nearby camp circle and recognize Bluebird’s grandmother as their own. Black Eagle, a grandson of Bluebird’s grandmother, returns for them and brings them back to their original camp. Camp life resumes but is struck by tragedy when Bluebird’s grandmother passes away while picking up firewood. Rainbow, the father of Little Chief, a young boy that Bluebird had made moccasins for, proposes to Bluebird and she accepts. Gloku, Rainbow’s mother, eagerly accepts Bluebird as her daughter-in law. Like Waterlily, Gloku had also had a difficultchildhood. It is revealed that she survived a violent attack on her tiyospaye.
Wokaya, the storyteller, tells the story of the buffalo dreamer and explains the dreamer’s essential role and legend of bringing buffalo to the tribe. Bluebird continues to learn about proper kinship with Rainbow’s familial members. One morning, Bluebird returns to her tipi to find a snake coiled around Ohiya, Little Chief’s brother. A snake dreamer is called, and he lures the snake away from the baby, stating that the snake’s visit was a good omen. Waterlily also scares her family members when she becomes ill after eating too much pemmican cake. Bluebird promises Waterlily that Rainbow would throw her a hunka ceremony making her a “child beloved” (a very honorable status) if she gets well. Little Chief demonstrates that he is growing up when he kills his first buffalo, his first enemy, and joins a war party. Waterlily’s prestige is strengthened when Rainbow sponsors a Buffalo Ceremony for her, which was a very rare and costly ceremony. Rainbow also demonstrates his own importance within the tribe by being asked to become a member of the Kit Fox Society, an elite group of prestigious men.
Rainbow then plans a trip to go visit his kola, which was a term held for men who pledged a very strong friendship pact to each other. During this journey,“Long Knives” (white settlers) are discussed for the first time, as the Dakota are puzzled by their wagons. The women express interest at the cloths that “Long Knives” have, as well as the variety of materials that are available at the trader’s stores. During the visit, the Dakota invite the Omaha to the Sun Dance, which was the most important religious event for the Dakota. This event held men who had made oaths to their words as individuals fasted, wept, sang, or subjected themselves to ritualized scarring. During this ceremony, Waterlily notices Lowanla, a boy who had a beautifulsinging voice who was part of the Sun Dance. Lowanla had made a promise to the Great Spirit when his father was sick that if he got well that he would give up one hundred pieces of his flesh. His father did get well, and at the Sun Dance he would have to honor his promise. He bravely takes twenty cuts of flesh at the ceremony, but unprecedentedly his aunts demanded that they take the remaining cuts. Lowanla’s sisters follow, and the hundred cuts are taken. Waterlily boldly goes over to his tent with a pan of water, but slides it under the tipi and runs away so that he does not see her. She becomes ashamed after she does this, and vows never to tell anyone of her act.
Rainbow and the rest of the family return home and Bluebird lectures Waterlily about the proper ways to accept a marriage. Waterlily witnesses the Virgin’s fire, where Leaping Fawn vindicates herself after a man incorrectly tries to tarnish her honor. Gloku passes away, and Waterlily properly mourns for her grandmother. Months later, Waterlily is “bought” by Sacred Horse. She experiences internal conflict as she does not know Sacred Horse, butalso feels that marrying Sacred Horse would fulfill her kinship obligations. Two horses that were intended to honor Gloku had been killed in the middle of the night. Bear Soldier, on behalf of his son Sacred Horse, had offered to buy Waterlily for two fine horses in replacement of the ones murdered. After much deliberation, Waterlily accepts.
Sacred Horse proves to be a considerate husband, although quiet and shy. Waterlily finds adjusting to married life a long process as she has to adapt not only to a husband, but also to an entirely new tiyospaye. However, life is made more comfortable when she is“adopted” by a woman who remembers her as Ohiya's sister. In order to establish proper kinship, Waterlily makes her social parent’s newborn moccasins, and is highly praised for her kinship responsibility.
At Sacred Horse’s camp there is underlying talk of disease associated with “Long Knives” (smallpox) Sickness breaks out in the camp, and Sacred Horse tries to get his family to move elsewhere to avoid it. Tragically, Sacred Horse himself is stricken with the smallpox and dies alone by request. Soon after, the small tiyospaye is attacked by Non-Dakotas and many perish by scalping. Feeling alone, Waterlily (now with child) is called back by her social parents as they help her cope with her recent tragedies. While with her social parents it is arranged for Waterlily to return to her own tiyospaye.
Lowanla comes for her and they agree to get married under dual-consensus, which was also an honorable way to get married. Waterlily gives birth to a boy who she names Mithra. Waterlily is surprised when Lowanla remembers her from the Sun Dance, and tells her that he had received a little bucket of water at the ceremony and had hoped that it was her who delivered it. However, Waterlily had promised herself that she would never tell him that it was her who gave him the bucket, even when he said that it would make him perfectly happy all of his life. The novel ends with Waterlily’s self-affirmation to never break her promise.