In the Penelopiad, Margaret Atwood retells the story of Homer's Odyssey through Penelope's point of view. In the Odyssey, Odysseus has just left the Trojan war and sets out for Ithaca, where his wife, Penelope, and son, Telemachus, are waiting for him. However, many misadventures derail his return home, in part because the god of the ocean, Poseidon, is angry with him. It is many, many years before he is able to return home. Through that time, however, Penelope remains faithful to Odysseus and patiently waits for his return.
In the Penelopiad, Penelope tells her version of events through the voice of a spirit in the Underworld. She begins her story with her childhood, explaining that she is the daughter of King Icarius of Sparta and a Naiad. Neither parent is overly affectionate with Penelope; in fact, King Icarius tries to have Penelope killed when she is very young by throwing her into the ocean. However, because she is half-Naiad, she is saved by a group of ducks who bring her back to shore. Because Penelope is of noble birth, she is married off when she is fifteen. Her kingdom holds a competition to see who will win her hand, and Odysseus wins, even though he is not the noblest nor the richest suitor. Penelope and Odysseus tell each other stories from their childhood on their first night as a married couple, and Penelope quickly grows fond of him. Odysseus announces early in their marriage that he intends to bring her back to his own Kingdom, Ithaca, which goes against tradition.
Once Penelope and Odysseus arrive in Ithaca, Penelope has difficulty adjusting. Her mother-in-law, Anticleia, and Odysseus's nurse, Eurycleia, give her a hard time. She keeps mostly to herself and spends the nights with Odysseus. In time, she gives birth to a son, Telemachus. When Telemachus is one year old, Helen runs away with Paris of Troy. Odysseus swore an oath that he would help recover Helen if she was ever taken away from her husband, Melenaus. Odysseus is forced to leave Ithaca for Troy. He and other Greek soldiers wage a war against Troy that lasts ten years. Over this time, Penelope hears updates about Odysseus through minstrel songs. Eventually, the news that Troy has fallen and the Greek soldiers are headed home arrives in Ithaca. However, Odysseus does not return. Instead, Penelope hears rumors about what he is up to—sometimes, fantastical adventures; other times, sordid and lust-driven conquests. Anticleia dies, and Odysseus's father, Laertes, leaves the palace to wander the countryside. Penelope is left to run the palace by herself. Another ten years pass with no word from Odysseus.
Eventually, Odysseus is gone for so long that many assume that he is dead. Suitors for Penelope's hand in marriage flood Ithaca. She is forced, by hospitality customs, to feed and house them. Meanwhile, they abuse their welcome and eat up most of the kingdom's food. As the years pass, the suitors become more insistent and Telemachus grows frustrated with his mother. Penelope comes up with a plot to keep the suitors at bay: she tells them that she will choose a man to marry as soon as she has finished weaving a funeral shroud for her father-in-law, Laertes. However, every night, she and twelve maids (the chorus) undo the work that she has done the previous day. Penelope tells these maids to spy on the suitors. Some of these maids fall in love with the suitors and some, unfortunately, are raped by them. Eventually, Penelope's secret is revealed, and the suitors demand that she choose a husband as soon as the shroud is completed. Meanwhile, Telemachus, frustrated at his mother and her treatment of the suitors, decides to leave on a ship to look for Odysseus himself. When he returns, he tells his mother that he has visited Melenaus and has seen Helen.
The next day, Odysseus finally returns. He is disguised as a beggar in order to hide his identity from the suitors. Penelope recognizes him right away but pretends she doesn't know who he is. Telemachus is in on the secret. Eurycleia washes his feet and yelps with joy when she recognizes a scar on her leg. Odysseus and Telemachus slaughter the suitors and then the twelve maids. Penelope does not tell anyone that the maids were acting on her behalf. Once the suitors have been slaughtered, Penelope officially reunites with Odysseus. She takes her time, keeping up the charade that she does not recognize him until he reveals special knowledge about their marriage bed. Soon after he arrives in Ithaca, Odysseus leaves, claiming that he needed to perform a specific task in order to atone for killing the suitors. In the afterlife, Odysseus chooses to be reborn constantly, leaving Penelope to wait for him even in death. Though he would like to stay at his wife's side, the spirits of the 12 maids are constantly following him, not letting him rest.
Penelopiad is interspersed by a chorus line told by the voices of the 12 maids who are murdered by Odysseus and Telemachus at the end of the novel. They lament their violent deaths as well as their hard lives. Each of their chapters is very short and they come in different forms. They generally have an ironic tone.