The book is told in the first person and begins with Percy Jackson, a 12 year old boy with dyslexia and ADHD living in New York City explaining that he has been expelled from every school he has ever attended, all of them happening in very strange ways. When his class from Yancy Academy takes a field trip to the Metropolitan Museum of Art, his pre-algebra teacher Mrs. Dodds transforms into one of the three Furies of Greek myth and attacks him. Percy's Latin teacher, Mr. Brunner, throws to him a magic sword named Anaklusmos, or Riptide, and sends Mrs. Dodds to Tartarus. When Percy comes out from the battle Mr Brunner is gone and acts like he was never there, and nobody remembers Mrs. Dodds and his best friend Grover Underwood acts strangely.
When Percy and his mother, Sally, go to Montauk Beach in New York, Grover comes to tell them to leave immediately. A terrible storm rages as they drive to the New York countryside and they are attacked by a Minotaur. In the ensuing fight, the Minotaur takes Sally in a blinding flash of gold light. Enraged, Percy takes one of its horns and kills the Minotaur, passing out from exhaustion shortly afterwards. He wakes up three days later, healed by nectar and ambrosia, at Camp Half-Blood. Grover reveals himself to be a satyr, and Mr. Brunner to be Chiron the centaur. As Percy's divine parent is unknown, he is placed in the Hermes cabin, where all the unclaimed half-bloods stay. He meets Luke, a son of Hermes; Annabeth Chase, a daughter of Athena; and Clarisse La Rue, a daughter of Ares. After several water-related incidents, a trident mark appears above Percy's head as his father, Poseidon, claims him.
The Oracle at the Camp Half Blood tells Percy to find the stolen master lightning bolt of Zeus, since Zeus blames Poseidon for stealing it. After defeating several mythological monsters, including Medusa, Echidna, and the Chimera, Percy, Annabeth and Grover find Hades, who has taken Sally but had his Helm of Darkness (his symbol of power) stolen too. Hades also accuses Percy of stealing his helm and threatens to kill Percy and his mother and release all the dead back into the real world. Percy and his friends use magical pearls to transport themselves out of Hades' kingdom. After discovering that Ares has all the stolen items, Percy challenges him to a duel and wins, to his own surprise. When Percy presents the Helm to Hades, Hades realizes that Percy has not stolen it and returns Sally safely.
After the bolt is given back to Zeus, Luke is revealed to be the lightning thief and the number one servant of Kronos, the Lord of the Titans. Luke tries to kill Percy by calling on a pit scorpion, but Percy manages to kill it. Percy decides to spend the school year with Sally instead of staying at camp.