When George Orr is caught after taking too many drugs without prescription, he is assigned to Voluntary Therapy. Which means that he has to have therapy or go to jail. He is sent to Dr William Haber, an obscure sleep researcher. George tries to tell him about the dreams. That they come true, but he's having difficulty making himself understood.

When he dreams 'effectively', he doesn't wake up and find out that what he dreamt comes true, he finds out it has already come true, and has always been true. That the whole world was retroactively changed by his dream. When he was younger, he often wished his Aunt weren't living with them after her divorce. One day when he woke up, she wasn't, and she never had been, she'd died six weeks earlier.

Haber uses a machine to amplify George's dream states, it take the pattern of impulses and feeds them straight back, and gives a hypnotic suggestion that George should dream about a horse. When George wakes up, he doesn't remember the suggestion, but the huge picture of a mountain on the wall has been replaced with a picture of a horse. Haber claims it was always there, and George is disappointed that Haber didn't notice the change.

The following day when George wakes up, the mountain is back. He realises that Haber did know about the change, but he won't admit it. As time goes on, George realises that Haber is using his dreams to influence reality in larger ways, trying to make the world better. He goes to see a lawyer, a woman called Heather Lelache, and tries to enlist her help. She doesn't believe him, but feels sympathy for him, and decides to find out if Haber is using his experimental machine unethically.

By the time she gets to sit in on a session, Haber is a leading researcher in an important institute, a powerful man. But it doesn't occur to him that she will see the change too. This time, he suggests that George is not worried about over population anymore. While they watch through the window, the buildings of the city disappear, because they had never been built. Plague had killed off most of the world's population and overcrowding has never been a problem.

Now.

By the time Haber is ready to cut George loose, people are all grey, not different colours, Heather has vanished, and there are aliens walking around on earth. One of the aliens tries to give him help, and he dreams back at his home, and when he wakes up, Heather is his wife. But now she is grey too, instead of coffee coloured, and hasn't been shaped by her experiences the same way.

Haber ends their final session by telling George to dream that he can no longer dream effectively, and it works. But Haber now believes that he can use the stored pattern of effective dreaming gained from George to dream himself. When he ties, the whole world turns into chaos, and George barely returns in time to turn off the machine, losing his wife in the process.

The world is a jumble of different possibilities all throw together, buildings, ideas, people, memories. The earth tries to adjust, having no idea what had happened that day. George works in a shop, creating kitchen implements that are beautiful and appealing. One day Heather Lelache walks in, and he goes about trying to court his wife.