Back in Puritan times, in the early days of Massachusetts, there was a rich, powerful man named Colonel Pyncheon. Colonel Pyncheon wants to build a house to leave to his descendants. He finds the perfect spot for his house right next to a lovely spring of fresh water. The one problem with this place is that it's already owned by a poor man named Matthew Maule.
Matthew Maule refuses to sell his acre of land, which he has cleared and tilled himself. So Colonel Pyncheon waits for his opportunity. During the witchcraft trials of 1692, Colonel Pyncheon accuses Matthew Maule of witchcraft, and Maule is hanged. Maule doesn't die without getting the last word, though. He curses Colonel Pyncheon: "God will give him blood to drink" (1.4).
Once Maule is executed, Colonel Pyncheon takes his land and starts building his new home: the House of the Seven Gables. Oddly enough, Matthew Maule's son Thomas is the one who heads the construction of this new house. Everything seems to be going forward as expected, except that, on the day of Colonel Pyncheon's housewarming party, he is found dead in a chair in his parlor. There is blood on his neck, and everyone remembers Matthew Maule's curse.
A hundred twenty years later, but 30 years before the main action of The House of the Seven Gables takes place, the Pyncheon family has really gone downhill. There aren't many Pyncheons left, and the house is getting run-down and gloomy. Everyone knows that the Pyncheons are cursed. Their biggest problem is that they used to have a deed to a huge amount of land in Maine. Mysteriously this deed went missing on the day Colonel Pyncheon died. So the Pyncheon family wealth has dwindled.
The current head of the Pyncheon family decides that his family legacy is based on murder. He wants to make reparations to the Maule family by giving them the House of the Seven Gables. But he dies suddenly before he can succeed in making this transfer. This man's nephew, Clifford Pyncheon, goes to jail for murdering his uncle. The Pyncheon family's inheritance goes to Clifford's cousin Jaffrey Pyncheon. The only exception is the House of the Seven Gables itself, which goes to Clifford's sister Hepzibah Pyncheon.
Thirty years later, the main action of the novel starts. Hepzibah Pyncheon has been living by herself in the House of the Seven Gables all this time. She has gone a little nuts and has become very shy of people. She has grown so poor, though, that she has to open a store to support herself. Meanwhile, her cousin Judge Jaffrey Pyncheon has flourished. He has become a judge and has grown richer and richer over the years. But no matter how often he offers to help Hepzibah financially, she absolutely refuses.
Hepzibah bears a grudge against Judge Pyncheon because she knows that he framed her brother Clifford for murder. Clifford has lost 30 years of his life in jail for a crime he didn't commit. But Clifford is about to be released, and Hepzibah is just waiting for him to come home. Both Hepzibah and Clifford know that Judge Pyncheon is just like the original Puritan Pyncheon: he's the stern, self-righteous Colonel Pyncheon reborn.
By chance, just as Hepzibah is preparing for Clifford's return, her young niece Phoebe turns up at the House of the Seven Gables. Phoebe is looking for a place to stay now that her father has just remarried. Hepzibah agrees to take Phoebe in, and Phoebe starts looking after the shop and house. She is a lovely, cheerful girl and she really brightens up the lives of both Hepzibah and Clifford (once he gets home from jail).
Phoebe also befriends the lodger in the House of the Seven Gables, Mr. Holgrave. Mr. Holgrave is a bit of an odd duck. He's only 22 but he's done a million odd jobs. He's also a social reformer and thinks everybody should be less stuck in the past. As an example of how dangerous it is to let the past dominate our lives, he only has to point to poor Hepzibah, who has really suffered from her pointless attachment to family pride and to the crumbling House of the Seven Gables.
Phoebe returns home to rural Massachusetts briefly to touch base with her family. She plans to come back to the House of the Seven Gables ASAP because Clifford and Hepzibah really need her. But while Phoebe is away, Judge Pyncheon approaches Hepzibah. He insists on seeing Clifford even though Hepzibah worries the shock will kill her brother. Judge Pyncheon is certain that Clifford has the secret to some imagined family wealth that Judge Pyncheon wants. Hepzibah thinks Judge Pyncheon is nuts: first, there's no way Clifford has any such secret. Second, why does Judge Pyncheon need even more money? He's already a wealthy and successful man!
Judge Pyncheon won't listen to any of these protests. He insists on coming inside and confronting Clifford. But as he sits down in the parlor to wait, he has a sudden stroke and dies. Clifford is delighted that this brute who framed him for murder is out of his life. Clifford pulls Hepzibah out of the House of the Seven Gables, and they run to the local railway station to get away from Judge Pyncheon's corpse.
The sudden absence of Hepzibah and Clifford from the House makes the whole town wonder what they've been up to. Judge Pyncheon hasn't been seen either, and town gossip starts to suspect that Hepzibah and Clifford have murdered him. But Mr. Holgrave, the lodger, has gone downstairs to discover Judge Pyncheon's body. He is sure that Judge Pyncheon died of natural causes, but he also knows that it doesn't look good that Clifford has run away. He hesitates to tell the world about Judge Pyncheon's death for fear that everyone will blame Clifford and Hepzibah unfairly.
Into all of this confusion, Phoebe suddenly returns. She finds Mr. Holgrave and he tells her the secret of Judge Pyncheon's sudden death the day before. Mr. Holgrave also believes that Judge Pyncheon's death will prove that Clifford didn't kill his uncle all those years ago. Clearly Judge Pyncheon has died of the same natural, hereditary disease that killed Clifford's uncle. It's just that, after Clifford's uncle's death, someone made it look like he was murdered. That someone was, of course, Judge Pyncheon. If Clifford would only come back to the House of the Seven Gables, they could go to the authorities and clear his name of that original murder so long ago, using this new evidence of Judge Pyncheon's body.
In the middle of this explanation, Mr. Holgrave also (somewhat bizarrely) declares his love for Phoebe. (Nice timing, dude.) Luckily Clifford and Hepzibah come back to the House of the Seven Gables of their own will, and they all agree to tell the world of Judge Pyncheon's sudden death by stroke.
Following Judge Pyncheon's death, everyone realizes that Clifford is not a murderer. Because Judge Pyncheon's only son has died abroad, Judge Pyncheon has no direct heirs. Thus his fortune goes to Hepzibah, Clifford, and Phoebe. They all decide to leave the House of the Seven Gables and move to Judge Pyncheon's lovely country home. Mr. Holgrave will go with them.
Mr. Holgrave also shows them the last secret of the House of the Seven Gables: there is a secret compartment in the wall, which contains the ancient Pyncheon family deed to huge chunks of land in Maine. This deed was very precious to Colonel Pyncheon, but it's completely worthless now that the land has been settled by other people. The deed was hidden by Thomas Maule, the builder of the House of the Seven Gables and Matthew Maule's son. Mr. Holgrave knows the secret of the hidden compartment because he is (ta-da!) a descendant of Matthew Maule. Thus, with Phoebe and Mr. Holgrave's love, the bad blood between the Maule and Pyncheon families has come to an end.