The Magician's Nephew tells the story of the creation of Narnia and the very first journey there by humans. Set in the Victorian era, the story follows young Diggory and Polly as they have a run-in with Diggory's eccentric Uncle Andrew, who attempts to use them as guinea pigs in his experiments with other worlds. Narnia is revealed to be only one of many other worlds, and its creation parallels the Biblical story of the creation of Earth. This novel explores themes of Christianity, original sin, and morality.
The story begins in London during the summer of 1900. Two children, Digory Kirke and Polly Plummer, meet while playing in the adjacent gardens of a row of terraced houses. They decide to explore the attic connecting the houses, but take the wrong door and surprise Digory's Uncle Andrew in his study. Uncle Andrew tricks Polly into touching a yellow magic ring, causing her to vanish. Then he explains to Digory that he has been dabbling in magic, and that the rings allow travel between one world and another. He blackmails Digory into taking another yellow ring to follow wherever Polly has gone, and two green rings so that they both can return.
Digory finds himself transported to a sleepy woodland with an almost narcotic effect; he finds Polly nearby. The woodland is filled with pools. Digory and Polly surmise that the wood is not really a proper world at all but a "Wood between the Worlds", similar to the attic that links their rowhouses back in England, and that each pool leads to a separate universe. They decide to explore a different world before returning to England, and jump into one of the nearby pools. They then find themselves in a desolate abandoned city of the ancient world of Charn. Inside the ruined palace, they discover statues of Charn's former kings and queens, which degenerate from the fair and wise to the unhappy and cruel. They find a bell with a hammer, an inscription inviting the finder to strike the bell.
Despite protests from Polly, Digory rings the bell. This awakens the last of the statues, a witch queen named Jadis, who, to avoid defeat in battle, had deliberately killed every living thing in Charn by speaking the "Deplorable Word". As the only survivor left in her world, she placed herself in an enchanted sleep that would only be broken by someone ringing the bell.
The children realize Jadis's evil nature and attempt to flee, but she follows them back to England by clinging to them as they clutch their rings. In England, she discovers that her magical powers do not work, although she retains her superhuman strength. Dismissing Uncle Andrew as a poor magician, she enslaves him and orders him to fetch her a "chariot"—a hansom cab—so she can set about conquering Earth. They leave, and she attracts attention by robbing a jewellery store. The police chase after her cab, until she crashes at the foot of the Kirke house. Jadis breaks off and brandishes an iron rod from a nearby lamp-post to fight off police andonlookers.
Polly and Digory grab her and put on their rings to take her out of their world, dragging with them Uncle Andrew, Frank the cab-driver, and Frank's horse, since all were touching one another when the children grabbed their rings. In the Wood between the Worlds they jump into a pool, hoping it leads back to Charn. Instead they stumble into a dark void that Jadis recognizes as a world not yet created. They then all witness the creation of a new world by the lion Aslan, who brings stars, plants, and animals into existence as he sings. Jadis tries to kill Aslan with the iron rod, but it deflects harmlessly off him and sprouts into a lamp-post "tree". Jadis flees.
Aslan gives some animals the power of speech, commanding them to use it for justice and merriment. Digory's uncle is frozen with fear and unable to communicate with the talking animals, who mistake him for a kind of tree. Aslan confronts Digory with his responsibility for bringing Jadis into his young world, and tells Digory he must atone by helping to protect Narnia from her evil. Aslan transforms the cabbie's horse into a winged horse named Fledge, and Digory and Polly fly on him to a garden high in the mountains. Digory's task is to take an apple from a tree in this garden, and plant it in Narnia. In the garden Digory finds a sign warning not to steal from the garden.
Digory picks one of the apples for his mission, but their overpowering smell tempts him. Jadis appears, having herself eaten an apple to become immortal; she tempts Digory either to eat an apple himself and join her in immortality, or steal one to take back to Earth to heal his dying mother. Digory resists, knowing his mother would never condone theft. He sees through the Witch's ploy when she suggests he leave Polly behind—not knowing Polly can get away by her own ring. Foiled, the Witch departs for the North. Digory returns to Narnia and plants the apple, which grows into a tree instantly. Aslan tells Digory how the tree works: anyone who steals the apples gets their heart's desire, but in a form that makes it unlikeable. In the Witch's case, she has achieved immortality, but it only means eternal misery because of her evil heart. Moreover, the magic apples are now a horror to her, such that the apple tree will repel her for centuries to come. With Aslan's permission, Digory then takes an apple from the newtree to heal his mother. Aslan returns Digory, Polly, and Uncle Andrew to England; Frank and his wife, Helen (transported from England by Aslan) stay to rule Narnia as its first King and Queen.
Digory's apple restores his mother's health, and he and Polly remain lifelong friends. Uncle Andrew reforms and gives up magic but still enjoys bragging about his adventures with the Witch. Digory plants the apple's core with Uncle Andrew's rings in the back yard of his aunt's home in London. Years later, Digory's family inherit a mansion in the country, and the apple tree blows down in a storm. Digory has its wood made into a wardrobe, setting up the events in The Lion, the Witch and the Wardrobe .