Neo-Victorian engineer named John Percival Hackworth, who lives in the Neo-Victorian enclave in what used to be China, is commissioned by a nobleman named Lord Finkle-McGraw to create a book, to be entitled A Young Lady's Illustrated Primer, to teach his granddaughter Elizabeth to think for herself and not be tied down by the strict Neo-Victorian society. The book is completely interactive, and is programmed to immediately "bond" with a little girl after it is constructed. Hackworth has other plans, however, and decides to steal the book for the edification of his own young daughter, named Fiona. He smuggles the book into Shanghai, a Han enclave across the Yangtze from New Atlantis, where a hacker named Dr. X is able to make a copy of the book from information in a nanosite that Hackworth carries in his bloodstream. While on his way back to the New Atlantis enclave, Hackworth is mugged by a group of thete boys. One of these boys, named Harv, takes home the hacked copy of the Primer to his little sister Nell, who immediately bonds with it, and it begins to tell her the story of Princess Nell and her four friends, who are Nell's stuffed toys in real life.

ell and Harv live with their mother Tequila, and her ever-changing parade of often abusive boyfriends in a shabby apartment. The Primer is constructed to be interactive thought the use of ractors. Ractors take the place of actors in the Diamond Age; they create roles in interactive productions though the use of nanosites implanted in their bodies. A ractor named Miranda Redpath is given the assignment of Nell's Primer, and stays with her for many years. Her boss, Carl Hollywood, worries about Miranda's future when she devotes so much time to Nell, but she is happy. During that time, she essentially becomes Nell's mother, and sees her through many horrible times.

ackworth manages to conceal his crime, or so he thinks, and compiles a copy of the Primer for Fiona, and one for Elizabeth as well. His is eventually discovered however, and he is sentenced by Judge Fang, a cohort of Dr. X's, to create several thousand copies of the Primer to educate thouands of little girls he has saved from infanticide in mainland Han. Hackworth is then sent on a quest to find an elusive person called only The Alchemist, and eventually becomes part of a gestalt community called the Drummers who spread information in nanosites by the exchange of bodily fluids. He lives with them for 10 years, all the while communicating with Fiona through her copy of the Primer.

iranda eventually convinces Nell to run away from home with Harv when one of the boyfriends becomes excessively violent. They seek refuge in Dovetail, a Phyle that is a community of artisans who create handmade goods for the Neo-Victorians, and home to one of Tequila's kindest ex-lover. They take Nell in, but cannot extend this welcome to Harv because of his previous criminal activities. He flees, and Nell does not see him for many years. At Dovetail, Nell lives with the Constable, and attends school in the New Atlantis enclave at Miss Matheson's Academy of the Three Graces, where she befriends Elizabeth Finkle-McGraw and Fiona Hackworth.

ell learns many valuable lessons from the Primer over the years, everything from martial arts, to cooking, and computer theory. After a time, Miranda wishes to find her. She meets up with two avant-garde performers and joins the Drummers, where she is still able to ract for Nell's Primer. Meanwhile, Nell is also learning many lessons at the Academy and grows into an intelligent and stable young lady, while Elizabeth runs away from home to join CryptNet, the hacker phyle, and Fiona is dreamy and lost in her own world.

uring Hackworth's disappearance, his wife has divorced him, and upon his return he goes to visit her and Fiona. At the end of this visit, Fiona runs after him in the road, and jumps on to his automated horse, and joins him on his quest. Their search eventually leads them to an event put on by a surreal theater troupe called Dramatis Personae, where each participant takes place in their own story. Hackworth's experience here leads him to realize that he himself is the Alchemist, and he interacts with Nell in the Primer, appearing as King Coyote, the mastermind of all the tricks that Princess Nell has encountered in her adventures in the Primer. Carl Hollywood is tipped off to Hackworth's appearance in this troupe's play, and hacks into his play, realising that he has found the Princess Nell, whon Miranda is seeking. Fiona decides to remain with Dramatis Personae, and Hackworth is again alone.

fter the death of her good friend Miss Matheson, the headmistress of the Academy, Nell flees to Shanghai, where she becomes a author of ractive programs. She is slowly reaching the end of the primer, and at the end, Princess Nell discovers that her subjects have all been made into mice by enchantment, and when she disenchants them, she finds that they are an army of little girls. Meanwhile, all the girls being raised on Dr. Fang's boats come onto the mainland, and battle their way past Han revolutionary groups to find Nell. The girls help all the people not of the Han phyle to escape from Shanghai, across the sea to New Atlantis. Finally, at the end, Carl Hollywood, who has met up with Nell, discovers that Hackworth has been infecting the Drummers with various harmful nanosites that causes the females to spontaneously combust, among other things. They descend to the realm of the Drummers and rescue Miranda.