In England in the years 1940-41, large groups of children are evacuated from the city. Among one of such groups are two young evacuees, Penny and Primrose, who become quick friends during the train journey to the countryside. Their parents have not told them why they are being sent away, and together they create theories to explain the situation. They do not know how long the journey will take or when they will be allowed back, and wonder if they are being punished. As they sit together they express their desire to be taken in by the same family so that they can stay together. The group of children are taken to mansion in the countryside, where they are to stay until an adult notifies them of their assigned family. As Penny and Primrose wait, Penny suggests that the two of them go into the forest. An even younger girl, Alys, overhears them and expresses her desire to follow them into the forest. They insist that Alys is too young and run off into the forest without her. Primrose, the more hesitant of the two, worries about getting lost, and warns that they shouldn't go out of sight of the gate. As they walk, they begin to hear small sounds and detect a strong smell. They then see a thing that they cannot identify. They hide behind a fallen tree trunk to avoid the strange creature approaching them, and observe it move through the forest. They notice it has a strange quality - if it hits something, its body magically comes apart and then comes together again. Penny and Primrose are so horrified that they hold each other and sob. Then, they leave the forest and do not talk to each other again. The next day, the girls are placed into different families - Primrose onto a diary farm, and Penny into a parsonage. The girls do not stay with their respective families for long, and shortly thereafter return to the city, where they end up living through bombings and blitzes. The narrator recounts Primrose's and Penny's subsequent histories—both their fathers are killed in the army. Penny eventually attends university and becomes a child psychologist, while Primrose does a variety jobs, working as a barmaid, working in a store, and eventually discovering a talent for storytelling. She begins to work freelance entertaining children's parties and kindergartens. The house where they briefly stayed in the countryside becomes a museum, and in autumn 1984 Penny and Primrose coincidentally meet there as adults to tour the museum. Both their mothers had died several months earlier. They eventually recognize each other as they are looking at an exhibit about a creature resembling the one that they had seen in the woods so many years ago—a legendary "Loathly Worm." The two decide to sit down for tea and begin to tell each other about their respective lives. They discover the similarities of their stories and begin to muse about the strange coincidence that they both happened to be in the house at the same time. Then, they discuss the creature they saw in the woods so long ago, and take comfort knowing that they both had the same memory, and that it really had happened. They make plans to have dinner the following evening, but neither of them keep the arrangement. The next morning, by coincidence, both decide to go to the woods, though they don't meet. They separately wander through the forest and ponder the significance of the thing they saw in the forest and the life events that followed the sighting—Primrose feels that the sighting taught her something she does not yet understand, while Penny reflects that it was because of this strange sighting that she became interested in child psychiatry. The two women see each other again when the reenter the city. On the train platform they look into each others' face and, in their heads, blame the other for being witness to the terrifying sighting of the thing, making it so that neither could pretend it didn't happen. Without saying anything, the two turn from each other and walk away. Penny decides to go face the Thing, and returns the forest once more. She calls to it, but before the reader can see what happens, the scene cuts to Primrose. Primrose, at the same time, is in a shopping mall, and as the story ends she begins to tell a group of the children the story of two girls "who saw, or believed they saw, a thing in a forest...."