The book starts in the English village of Iping in West Sussex, as curiosity and fear are started up in the inhabitants when a mysterious stranger arrives to stay at the local inn, The Coach and Horses. The stranger wears a long, thick coat, gloves, his face is hidden entirely by bandages, large goggles, and a wide-brimmed hat. The stranger is extremely reclusive and demands to be left alone, spending most of his time in his room working with a set of chemicals and laboratory apparatus, only venturing out at night. He quickly becomes the talk of the village as he unnerves the locals.
Meanwhile, a series of mysterious burglaries occur in the village in which the victims catch no sight of the thief. One morning when the innkeepers pass the stranger's room, they enter in curiosity when they notice the stranger's clothes are scattered all over the floor but the stranger is nowhere to be seen. The furniture seems to spring alive and the bedclothes and a chair leap into mid-air and push them out of the room. Later in the day Mrs. Hall confronts the stranger about this, and he reveals that he is invisible, removing his bandages and goggles to reveal nothing beneath. As Mrs. Hall flees in horror, the police attempt to catch the stranger, but he throws off all his clothes and escapes.
The Invisible Man flees to the downs, where he frightens a tramp, Thomas Marvel, with his invisibility and forces him to become his lab assistant. Together with Marvel, he returns to the village where Marvel steals the Invisible Man's books and apparatus from the inn while the Invisible Man himself steals the doctor's and vicar's clothes. But after the theft, Marvel attempts to betray the Invisible Man to the police, and the Invisible Man chases after him, threatening to kill him.
Marvel flees to the seaside town of Burdock where he takes refuge in an inn. The Invisible Man attempts to break in through the back door but he is overheard and shot by a black-bearded American, and flees the scene badly injured. He enters a nearby house to take refuge and dress his wound. The house turns out to belong to Dr. Kemp, whom the Invisible Man recognises, and he reveals to Kemp his true identity — Griffin, a brilliant medical student with whom Kemp studied at university.
Mr. Griffin explains to Kemp that after leaving university he was desperately poor. Determined to achieve something of scientific significance, he began work on an experiment to make people and objects invisible, using money stolen from his own father, who committed suicide after being robbed by his son. Griffin experimented with a formula that altered the refractive index of objects, which resulted in light not bending when passing through the object, thereby making it invisible. He performed the experiment using a cat, but when the cat's owner, Griffin's neighbour, realised the cat was missing, she made a complaint to their landlord, and Griffin wound up performing the invisibility procedure on himself to hide from them. Griffin theorizes part of the reason he can be invisible stems from the fact he is albino, mentioning that food becomes visible in his stomach and remains so until digested, with the bizarre image passing through air in the meantime.
After burning the boarding house down to cover his tracks, he felt a sense of invincibility from being invisible. However, reality soon proved that sense misguided. After struggling to survive out in the open, he stole some clothing from a dingy backstreet shop and took residence at the Coach & Horses inn to reverse the experiment. He then explains to Kemp that he now plans to begin a Reign of Terror (The First Year of the Invisible Man), using his invisibility to terrorize the nation with Kemp as his secret confederate.
Realizing that Griffin is clearly insane, Kemp has no plans to help him and instead alerts the police. When the police arrive, Griffin violently assaults Kemp and a policeman before escaping, and the next day he leaves a note on Kemp's doorstep announcing that Kemp will be the first man killed in the Reign of Terror. Kemp remains cool and writes a note to the Colonel, detailing a plan to use himself as bait to trap the Invisible Man, but as a maidservant attempts to deliver the note she is attacked by Griffin and the note is stolen.
Just as the police accompany the attacked maid back to the house, the Invisible Man breaks in through the back door and makes for Kemp. Keeping his head cool, Kemp bolts from the house and runs down the hill to the town below, where he alerts a navvy that the Invisible Man is approaching. The crowd in the town, witnessing the pursuit, rally around Kemp. When Kemp is pinned down by Griffin, the navvy strikes him with a spade and knocks him to the ground, and he is violently assaulted by the workers. Kemp calls for the mob to stop, but it is too late. The Invisible Man dies of the injuries he has received, and his naked and battered body slowly becomes visible on the ground after he dies. Later it is revealed that Marvel has Griffin's notes, with the invisibility formula written in a mix of Russian and Greek which he cannot read, and with some pages washed out.