The narrator introduces himself to us: he is a hydrocephalic, meaning he was born with water on the brain. He is also a budding artist and hopes to use his words to connect with people.
The narrator then tells us the story of Oscar, his best canine friend. His family is too poor to afford veterinary care, so the narrator's father shoots the poor pup. The kid is, of course, devastated. Poverty does indeed suck.
We then meet the narrator's best friend, a tough-guy named Rowdy. Rowdy spends quite a bit of time with the narrator's family, since his own is abusive. The two go to a powwow together where Junior (one of our narrator's names) gets roughed up a bit, and Rowdy has to intervene. We see that Rowdy is Junior's main protector.
Moving on, Junior is at school one day and finds his mother's name written in a geometry textbook. Infuriated, he throws the book at his teacher, Mr. P. After he is suspended from school, Mr. P comes to visit and tells Arnold not ever to give up. He encourages Arnold to leave the reservation.
Arnold takes Mr. P's advice seriously and tells his parents that he would like to transfer to the white school in Reardan. Junior's parents are okay with the idea, but Rowdy, Junior's best friend, is totally ticked off. Rowdy is so upset that he punches Junior in the face. The two become more enemies than friends. The reservation Indians also shun Junior for his choice.
Junior starts Reardan High School, where he meets the hot blonde Penelope and gets picked on by the jock Roger. Around this time we also learn that our narrator's full name is Arnold Spirit, Jr. Eventually, Arnold stands up to Roger and punches him in the nose. Roger doesn't fight back, but begins to respect Arnold.
Arnold hears the cute blonde Penelope puking in the school bathroom one day, and learns that she is anorexic. The two become close, even going together to the winter dance. Though he has been passing as middle-class, Penelope finds out that Arnold is poor and feels sorry for him. They become semi-girlfriend and boyfriend and Arnold lusts after her with a passion.
Arnold also becomes friends with a kid named Gordy who is the school genius. A total brainiac, Gordy teaches Arnold how to really read a book... and about other joys of learning.
Shuttling between Wellpinit and Reardan, Arnold begins feeling like a part-time Indian. He is Junior on the rez, where he is an outcast, and at school in Reardan he is Arnold.
After a conversation with his father, Arnold decides to try out for basketball. With a little encouragement from the Coach, he makes the team. During the first basketball match against his old school, Arnold is booed, pelted with a quarter, and the crowd turns their back on him. Rowdy then knocks him in the head and Arnold falls unconscious. In the rematch, though, Arnold's team wins, and he feels a bit guilty about this—kind of like he has been playing on the side of Goliath instead of David.
During the last half of the book, Arnold undergoes a series of losses: first his grandmother is hit by a drunk driver, then his dad's best friend Eugene is shot in the face at a 7-11. These are all alcohol-related accidents... as is the death of his sister Mary, who dies in a trailer fire. The only way Arnold can cope with all of the pain is by learning to embrace his joy—which he does by making lists.
The end of the book is a reconciliation between Rowdy and Arnold. They play a one-on-one game of basketball. Rowdy tells Arnold that Arnold is a nomad and accepts the fact that Arnold has left the reservation. Meanwhile, Arnold has decided that he is multi-tribal. He has found a way of looking at himself that is not solely based on "white" or "Indian." He belongs to many different tribes.