Matthew is a ten-year-old boy from Lafayette, Indiana. In the summer of 1916, he is diagnosed with rheumatism in his knee. A doctor prescribes him a three-week visit to Mudlavia, a pseudo-medical spa whose mud baths are known for their magical healing properties.

Upon arrival, Matthew and his mother meet a glamorously dressed trio. Harry Jones and his female associates seem out of place amongst the other patients. Matthew’s mother becomes suspicious of them. She hears a rumor that Harry is a Chicago mob boss on the run after he committed a murder. During his mud treatments, Matthew develops a conversational rapport with Harry. Drawing inspiration from the satirical plays that he performs with his neighborhood friends, he spins yarns about his life. Matthew’s mother gets in on the deceit to stave off boredom, and dishonesty becomes the game of the summer. Mother and son entertain themselves by gossiping behind Harry’s back and lying about themselves to his face. Harry confides in Matthew that Mudlavia’s supposed curative power depends on the patient’s belief in its magic. One day, Matthew receives a letter from a friend that mentions his father’s infidelity.

Meanwhile, Harry and Matthew’s mother become romantically involved. Worried about his parents’ marriage, Matthew tells his father that he’s not getting better. A hospital diagnosis reveals that Matthew actually has a tumor, and he undergoes an amputation. After returning home, Matthew’s mother abandons their family. He grows up suspecting that she ran off with Harry. Although Matthew goes on to have a good life, he often reminisces on the shallow happiness he shared with his mother at Mudlavia.