The book's protagonist is an English scientist and gentleman inventor living in Richmond, Surrey, identified by a narrator simply as the Time Traveller. The narrator recounts the Traveller's lecture to his weekly dinner guests that time is simply a fourth dimension. He then reveals that he has built a machine capable of carrying a person, and returns at dinner the following week to recount a remarkable tale, becoming the new narrator.
In the new narrative, the Time Traveller tests his device with a journey that takes him to 802,701 A.D., where he meets the Eloi, a society of small childlike adults. They live in small communities within large and futuristic yet slowly deteriorating buildings, doing no work and having a frugivorous diet. His efforts to communicate with them are hampered by their lack of curiosity or discipline, and he speculates that they are a peaceful communist society.
Returning to the site where he arrived, the Time Traveller is shocked to find his time machine missing, and eventually works out that it has been dragged by some unknown party into a nearby structure. Later in the dark, he is approached menacingly by the Morlocks, ape-like troglodytes who live in darkness underground and surface only at night. Within their dwellings he discovers the machinery and industry that makes the above-ground paradise possible.
He alters his theory, speculating that the human race has evolved into two species: the leisured classes have become the ineffectual Eloi, and the downtrodden working classes have become the brutish light-fearing Morlocks. Deducing that the Morlocks have taken his time machine, he explores the Morlock tunnels, learning that they feed on the Eloi. The Time Traveller theorizes that intelligence is the result of and response to danger; with no real challenges facing the Eloi, they have lost the spirit, intelligence, and physical fitness of humanity at its peak.
The Morlocks use the time machine as bait to ensnare the Traveller and he travels further ahead to roughly 30 million years from his own time. There he sees some of the last living things on a dying Earth, menacing reddish crab-like creatures slowly wandering the blood-red beaches chasing butterflies in a world covered in simple lichenous vegetation. He continues to make short jumps through time, seeing Earth's rotation gradually cease and the sun grow larger, redder, and dimmer, and the world falling silent and freezing out.
Overwhelmed, he returns to his laboratory, arriving just three hours after he originally left. The original narrator takes over and relates that he returned to the Time Traveller's house the next day, finding him in final preparations for another journey. The Traveller promises to return in half an hour, but three years later, the narrator despairs of ever learning what became of him.