The novel begins in 1992, when Hugh "Shuggie" Bain, the protagonist, is sixteen years old. He lives in a Glasgow boarding house and works at a grocery store earning little money. An older man who lives in the same building invites Shuggie to drink with him. Shuggie knows the man is usually good for a bit of money if he keeps him company. Shuggie lets his bathrobe fall open, allowing the man to take in his slender body.
The narrative moves back to 1981, when Shuggie is a young boy living with his mother, Agnes, his father, and his siblings Catherine and Leek at Agnes's parents' apartment in the Sighthill neighborhood of Glasgow. Agnes has separated from her first husband, who is the father of her first two children. She is married to Big Shug, the biological father of Shuggie. Big Shug is a taxi driver, and his open cheating is driving Agnes into a depression. To calm the depression, Agnes seeks solace in alcohol. As tensions between Agnes and Shug worsen, she becomes more volatile and self-destructive, setting the drapes in her bedroom on fire, nearly killing her and Shuggie. Big Shug, meanwhile, has been conducting an affair with Joanie Micklewhite, the cab dispatcher. Without consulting Agnes, he arranges to rent a council house in Pithead, a mining settlement on the outskirts of town.
The third part of the story takes place in 1982 in Pithead. Agnes is displeased with Pithead, which is full of out-of-work coal workers and their working-class families; she had hoped for somewhere more refined. Shug surprises Agnes with the news that he is leaving her as soon as they have moved in. He begins living with Joanie, though he returns at night to Agnes to have sex with her before leaving again. Shug's abandonment and the influence of other alcoholic women in the area contribute to Agnes's intensifying alcoholism. Money is also an issue, as Agnes's welfare benefits are meager and her drinking habit costly. Her children face their own battles, with Shuggie being bullied for his effeminacy, Leek struggling to take care of Shuggie and his mother when he could have gone to art school, and Catherine getting engaged young to Shug's nephew so she can escape the family and move to South Africa. Through everything, Agnes and Shuggie maintain a close bond. He often repeats his mother's posh manner of speech and cruel opinions, not knowing the meaning of certain things he says.
After meeting a mechanic who diagnoses at a glance that Agnes is an alcoholic, Agnes learns about Alcoholics Anonymous. She eventually begins attending meetings and is welcomed into the community of recovering alcoholics. Although in the past she considered having a job to be beneath her, she takes work as a petrol station attendant. While at work, she meets Eugene, a cab driver. The two begin dating, but Eugene grows uncomfortable with her identity as an alcoholic after her AA friends surprise her with a party to celebrate a year of sobriety. Out at dinner one night, Eugene convinces her to try some wine to prove that she doesn't have a problem. The wine provokes a relapse. Drinking heavily again, Agnes alienates herself from the people around her. Eugene avoids her, and she clashes with Leek, who decides he can't take care of everyone. After Agnes attempts suicide by cutting herself, Leek eventually leaves home, telling Shuggie that Agnes will never change.
Agnes and Shuggie move in 1989 to a flat in the East End. They are both optimistic, but it soon becomes clear Shuggie will not become a normal (i.e. heterosexual) boy and Agnes won't stop drinking. Shuggie becomes friends with Leanne, a girl whose mother is also an alcoholic. She accepts him for who he is, correctly guessing that he doesn't like girls, just as she doesn't like boys. Her drinking worsening, Agnes eventually chokes on her own bile. Shuggie is there with her in the flat, but he doesn't try to save her, thinking what Leek had said was right. After she dies, he wipes her lips off and gives her a kiss. Shuggie then goes to live with Leek briefly before taking a room in the boarding house.
Returning to 1992, the novel ends with Shuggie and Leanne bringing food and clothes to Leanne's alcoholic mother, who lives on the streets. As they walk away from Leanne's mother, Shuggie and Leanne discuss the prospect of going dancing. Leanne says there's no way Shuggie Bain can dance. Shuggie tuts at her, nods, and then spins on his heels.