The Covenant of Water begins in 1900 in Kerala, India. Mariamma, is a twelve-year-old girl whose uncle arranges for her to marry a 40-year-old widower, though Mariamma's deceased father wanted her to obtain an education. During their wedding, Mariamma's husband is astonished and upset to realize his new bride is a child, only ten years older than his son, Jojo. However, the groom's sister assures him that it is fate that he marries Mariamma, and the two return to his sprawling estate, Parambil. For the first few years of their marriage, Mariamma's husband, Big Appachen, treats her with a respectful, paternal distance, and Mariamma assumes the role of surrogate mother to Jojo. Their relationship deepens when she reaches adulthood, and despite their considerable age difference and the nature of their arranged marriage, they cultivate a deep love. Soon after the birth of their first daughter, Baby Mol, Jojo tragically dies after falling face-first into an irrigation ditch. Big Appachen then explains to Mariamma that his family has a history of inexplicable drownings and associated symptoms, such as hearing loss and a reckless love of heights. Mariamma vows to find someone who can cure this generational curse, which she dubs "the Condition." Mariamma and Big Appachen slowly recover from Jojo's death; a few years after, they welcome a second child, Philipose, and realize that their daughter has a developmental disability. After Big Appachen dies, suffering what appears to be a stroke, Mariamma takes over as sole head of the family, enlisting the help of her husband's distant relatives and trying to bolster educational opportunities at Parambil in hopes that someone will discover the cause of the Condition.
In Madras, Scottish surgeon Digby Kilgour begins his career in the Indian Medical Service, the only place where his Catholic heritage does not impede his career. Additionally, he hopes to forget his past in Glasgow, particularly his mother's disturbing suicide. However, Digby quickly realizes that his supervisor, Doctor Claude Arnold, is incompetent and uncaring, dismissing the symptoms of Indian patients, overlooking Indian doctors, and often showing up to work drunk. Though Digby is somewhat inexperienced, Claude's absences force him to assume a leadership role at the hospital. He is assisted by the hospital matron, Honorine, and makes friends with former patients and the local Anglo-Indian community. His situation is further complicated when he falls in love with Claude's neglected, artistic wife, Celeste. When Claude's misdiagnosis and botched surgery kill Digby's acquaintance, Jeb, Digby agrees to testify against his employer. However, Claude concocts a plan to discredit Digby by accusing him of having an affair with Celeste. When Celeste visits Digby to warn him about this plot, the two become lovers; after several days, Celeste admits why she came to visit Digby and ends the affair. While the two sleep, a candle overturns in Digby's cramped apartment, causing a fire that kills Celeste and disfigures Digby. Ashamed and no longer able to perform surgery, Digby flees to the remote home of his former patient, Lena Mylin, who then brings him to Swedish physician Rune Orqvist who runs a leprosarium, Saint Bridget's, nearby. Rune performs innovative surgery on Digby's hands, helping him regain motor control and accept the consequences of his actions. Digby also heals through art therapy provided by the ten-year-old Elsie, the daughter of one of Rune's friends.
Meanwhile, Philipose grows up surrounded by love at Parambil, though his limited hearing makes it difficult for him to attend school, and he is never able to swim. His main passion is learning English from an eccentric neighbor and reading classic Western literature. During a rainstorm, Philipose notices a boatman crying out for help, as his infant son is not breathing. Philipose helps clear the blockage in the baby's throat and forces the boatman to bring them to the nearest hospital. The boatman loses control of the vessel and crashes into Saint Bridget's, where they meet Digby, who directs Philipose to perform emergency surgery on the child. Though Philipose is successful, he is repulsed and traumatized, and will not pursue medicine, despite his mother's hopes that he will cure the Condition through his education. Later, Philipose attends college in Madras, following his passion and studying literature. However, his partial deafness is not accommodated in the classroom, and Philipose drops out of school. Wanting to make his failure meaningful, he buys several books and a radio, understanding that he can educate himself fully and comfortably at home. On the train ride back to Parambil, Philipose meets and falls in love with Elsie, who draws his portrait. Back home, Philipose devotes himself to becoming worthy of Elsie, publishing several acclaimed stories in the local newspaper. When he feels fully accomplished, he asks the local marriage broker to bring Elsie his proposal, which she accepts, believing Philipose will support her dreams of becoming an artist.
Philipose and Elsie marry. On the morning after the wedding, Philipose offers Elsie anything she wants, and she requests he cut down the plavu tree that obstructs the view from their bedroom. Philipose hesitates and procrastinates about removing the tree, which builds tension within their marriage. He is also unwilling to leave Parambil, even to visit Elsie's family or accompany her to receive an arts award in Madras. Later, Elsie and Philpose have a son, Ninan, who climbs to unsafe heights like Jojo and Big Appachen. One day, fearing his marriage to Elsie is irreparable, Philipose removes branches from the plavu tree, leaving it ugly and sharp. The next day, Ninan falls while climbing the tree and impales himself on one of the branches. Philipose shatters his ankles trying to rescue Ninan, who dies a gruesome death. Elsie and Philipose blame one another, and as Philipose develops an opium addiction, Elsie leaves Parambil, only returning when Baby Mol nearly perishes from grief. Though Elsie only planned to visit briefly, she is forced to stay when a catastrophic monsoon makes the roads impassable. The family then realizes she is pregnant, and Philipose suspects the child is Ninan reincarnated, sent to redeem Philipose from his guilt. In the height of his addiction, Philipose's behavior becomes increasingly erratic, and he ruins Elsie's sculptures; Elsie asks Big Ammachi to care for her child, and promises to name the infant Mariamma, if she is a girl. After a life-threatening labor, Elsie, weakened and ill, refuses to hold her child; when she is strong enough, Elsie disappears, leaving her clothes by the shore; the family assumes she intentionally drowned herself. Big Ammachi raises Mariamma, ensuring that she has all the educational opportunities and parental support Big Ammachi was denied. Elsewhere, Digby performs surgery on Elsie's friend Lizzi, whose husband hallucinated and stabbed her, opening a wound in her womb through which her unborn child sticks its fist. Digby successfully closes the wound, nicknaming the child Lenin, after Vladimir Lenin's signature raised fist.
As Mariamma grows up, Philipose recovers from his opium addiction through strict routines and becomes an involved, doting father. Mariamma is highly intelligent, interested in swimming and biology. One day, Lenin arrives at Parambil, the soul survivor of a smallpox epidemic in his village. Big Ammachi invites him to live on the estate, though his strange and mystical behavior infuriates the family, especially Mariamma. He is then sent to seminary school, and Mariamma does not see him until years later, when they unite at the Maramon Convention. After hearing a mistranslated speech about the need to care for the sick and build hospitals to serve the people neglected by the British, Mariamma confirms that she plans to study medicine, and enrolls in college in Madras. Big Ammachi is thrilled, believing that Mariamma will cure the Condition. While at school, Mariamma performs exceptionally, winning competitions and acing her exams. However, an exam proctor harasses her, threatening to fail her if she does not touch him sexually. Confused and afraid, Mariamma places her hand in his pocket, then crushes his groin in fury. Though she is praised for fighting back and removing a predator from the campus, Mariamma is traumatized by the incident. She is also devastated when Big Ammachi and Baby Mol pass away on the same night. When Lenin shows up to visit her, fleeing the authorities after joining an insurgent group, the two leave the city, confess their feelings to each other, and make love. Though Lenin asks Mariamma to marry him and join the revolution, she refuses, putting her dreams first. Though she misses Lenin and fears for his safety, she moves forward, working on a research project studying the physical impacts of leprosy.
Philipose leaves Parambil for the first time in years to do research for an article he is writing. At his hotel, he notices a catalog for an art auction, featuring a piece that he recognizes as belonging to Elsie. Determined to make amends, Philipose boards a train to Madras, pushing through his fear that something terrible will happen if he returns to the city. A bridge collapses under the train, and Philipose is thrown into the water. Though he miraculously survives the crash, he hears a child crying for help, and swims to rescue the child. Unable to orient himself in the water, Philipose drowns. Mariamma is devastated by her father's death, but seizes the opportunity to study the Condition by dissecting his brain. Her supervisor discovers small tumors on the part of his brain stem that impact balance and hearing. Mariamma decides to specialize in neurosurgery and moves back to Parambil to work at the local hospital, a condition of the scholarship that will allow her to study neuroscience. There, she begins to improve conditions and expand services with the help of her bureaucracy-savvy relative, Uplift Master, and Joppan, the intelligent but oppressed son of the estate manager, Shamuel. She also researches the Condition by filling out missing branches of her family tree and reading Philipose's journals.
One day, Digby arrives at Parambil to bring Mariamma to Saint Bridget's where she finds Lenin, who is on the run from the law and incapacitated with a mysterious illness. With her newfound knowledge of the Condition, Mariamma enlists Digby's help to perform an emergency brain surgery, which buys Lenin enough time to awaken and confess his feelings to Mariamma before he suffers a seizure. Knowing Lenin will be arrested, Mariamma rushes him to the nearest hospital where he survives a risky brain surgery. After he sufficiently recovers, he is taken into custody, promising he will find Mariamma again after he is released from prison. Mariamma helps publish an article about the Condition and its impact on personality, which she hopes will lessen Lenin's sentence. When she returns home, she reads one of Philipose's journals for comfort and is shocked to discover that he is not her biological father. Suspecting that Digby is actually her father, she returns to Saint Bridget's to confront him. There, Digby explains how he met Elsie after Ninan's death and gave her space to create her art. The two fell in love but were separated when Elsie returned to Parambil. He then explains that Elsie had to fake her own death because her pregnancy precipitated her leprosy, to which infants are particularly vulnerable. Mariamma grapples with her conflicting emotions, understanding that Elsie had to keep her distance to protect Mariamma, though Elsie and Digby followed Mariamma's success and loved her from afar. Digby then reveals that Elsie is still alive and standing nearby, though her damaged eyesight prevents her from seeing her daughter. As they debate whether or not to reveal Mariamma's presence, Elsie walks to the window, pressing her hands against the glass; without thinking, Mariamma raises her hand to meet her mother's.
