Whilst travelling across the desert, Kino and Hermes stumble across a man, dying of thirst and trapped in a sandstorm. After they help him find water and shelter, the man tells them that he is from the Land of Books, a country that gathers books from all around the world, but forbids its inhabitants to publish new material. Another rule of the country is that visitors may only take as many books as they bring, so, as thanks for helping him, the man rewards Kino with a book to use for trade.
After reading the book, Kino and Hermes continue on to the Land of Books. Arriving at the library, they are surprised to see that it is much smaller than expected- surely the books gathered here cannot represent the sum total of books gathered from around the world. Greeting them, the chief librarian explains that all of the books in this country are read by critics and divided into one of two classes- ‘harmless’ and ‘harmful’. Whilst the harmless books are placed on the shelves for anyone to read, the harmful ones are kept confined in the Department of Reading and Welfare’s headquarters, also known as the Castle.
Disappointed to find that none of the ‘harmless’ books are very interesting, Kino and Hermes leave the library, only to be stopped by the female librarian that they handed their book in to. She tells them that the man who gave them the book was her boyfriend, and asks if he mentioned anything about a secret entrance to the Castle. Kino replies in the negative, but nonetheless, the librarian decides to confide in her and take her to the secret base of the Publications Syndicate.
As Kino learns, the Publications Syndicate is an underground resistance group who have made it their duty to publish material not yet screened by the critics at the Castle. The librarian explains that her boyfriend used to carry books to the Castle for screening, even reading them on the way despite the fact that reading unscreened books is illegal here. The resistance had hoped that he might have learned of a secret entrance to the castle- one they could use to sneak in and rescue their trapped comrades. But even though Kino learned no such information from him, they would like her to join them anyway- her skill with a gun could come in handy. For her part, Kino refuses to help them- she has no intention of remaining her any longer than her standard three days.
As she goes to leave, the librarian swears Kino to secrecy about the resistance, before telling her about their mysterious contact- ‘The Author’. Once a critic, The Author read everything in the Castle, before locking himself away for two weeks and emerging having written a manuscript supposedly containing everything in the world. Although he has since gone missing, The Author is the one who writes all of the books published by the Publications Syndicate- stories that seem to blur the very distinction between fantasy and reality.
As they walk through the park that evening, Kino admits that she would like to read some more of The Author’s stories, only to be interrupted by a man who suggests that perhaps she is reading one right now- perhaps ‘Kino’ and ‘Hermes’ are just characters in a book. Kino soon realises that this man must be The Author himself, but before they can talk further, a man rushes past, being chased by the authorities. As the man bumps into Kino, he drops a key, and when she picks it up he tells her to hand it to the librarian so that she can pass it on to The Author. Whilst the man continues on his way, Kino turns back to The Author, only to find that he has departed- leaving a manuscript behind.
As Kino goes to pick up the manuscript, another man appears behind her. He warns her about the dangers of fantasy, and how books can introduce dangerous ideas into people’s head. Although Kino argues that in the end the readers are responsible for their own actions, the man cautions her about the dangers of falling too deeply into the world of fantasy, even telling her that the Department of Reading and Welfare was set up for the very purpose of curing those who lose the ability to distinguish fiction and truth.
That night, Kino reads the manuscript, and as she falls asleep, she finds the world of the book invading her dreams. Awakening the next morning, Kino struggles to shake off the world of the book, coming back to reality so that she can head to the library and hand over the key. Unfortunately, by the time she gets there, officials have arrived to take the librarian away. Apparently, she has gone crazy, and become unable to tell reality from fantasy; now, her only choice is to be sequestered in the castle with others like her.
In the park, Kino examines the key that she was unable to hand over, only to be approached by The Author once again. Leading her to a door, he uses they key to unlock it, and sends Kino and Hermes down a secret tunnel leading into the castle. If she wants the book about everything, then she will find it in there, kept with his other works on the red shelves.
Making it into the castle, Kino finds herself in a room lined with books, and containing a table full of critics, who are harshly analysing the latest book. To Kino’s surprise, the librarian and another resistance member are brought in and told to sit at the table- they are to become critics as well.
Whilst the horrified librarian complains at her fate, The Author’s voice begins issuing from the darkness, and she and the other resistance member decide to make a break for it and help him. As they fight off the guards, Kino rushes over to the librarian and quickly hands over the key and The Author’s manuscript, before heading for the shelf where the book about everything is kept. Before she can take it and leave, however, Kino is intercepted by none other than the Minister for Reading and Welfare.
The Minister takes Kino and Hermes to her office, and apologises for her getting mixed up in the events of this country. She explains that The Author is an escapee from the castle, a patient who believes the whole world is just part of a book that he wrote. The incident with the key was intended to be a set-up to lure The Author back to the castle- Kino was never meant to be involved. Nonetheless, with the way events have turned out, it should still be possible to recapture The Author, and as payment for the part Kino played, the Minister offers to let her have a book of her choice.
After choosing to take the book about everything, Kino gets up to leave, but the minister has one more thing to explain. There is a second reason for keeping books and critics in this castle- not just to contain the harmful books, but to contain the critics as well. The way the minister sees it, critics are just as harmful as books- for their constant analysis and criticism can ruin the enjoyment of the story for everyone.
In short order, the minister is fondly cradling her books and enthusing over the pleasure they bring, at least until one of her underlings bursts in to report a problem- someone has set all of her beloved books on fire! Whilst she laments their loss, Kino and Hermes decide it is well past time to leave.
Some time later, Kino and Hermes have moved beyond the Land of Books. Kino has read the book about everything, but in all honesty, it just isn’t that interesting. All of the pages are blank- the contents of the book are to be filled in by the imagination of the readers, and thus the book can contain anything, and everything in the world. Nonetheless, it is time to move on, but now Kino has one more question to consider- is her journey real, or is she just another character in another fictional story?