The Whispering Skull is set seven months after the events of the previous novel in the series, called The Screaming Staircase. At the start of The Whispering Skull, Lucy and her team at Lockwood and Co., an agency that investigates supernatural disappearances, are trying to stop the ghost of a man who had been executed nearly 200 years prior from haunting a school. After they get to the school, they discover that there isn't a single ghost haunting the educational establishment. Instead, dozens of ghosts are haunting the school.
As a result of the number of ghosts that are haunting the school, Lucy and her team aren't prepared to deal with them all. They flee the school to formulate a plan. However, as Lucy starts to escape, she nearly gets touched by a ghost. This touch would kill her, but she is saved by a rival agency named Fittes. Lucy is grateful to be alive but is upset that the Fittes agency is on the case as well. As a result, Lockwood (who leads the Lockwood and Co. agency) challenges Fittes to an agency vs. agency competition. Whoever can fix the haunting first wins. But whoever loses the competition must take out an ad in the newspaper acknowledging the winning agency is superior to their own. The leader of the Fittes agency, named Quill Kipps, agrees to the competition, which begins in earnest shortly thereafter.
The next morning, Lockwood and Co. is asked by a customer to find and then close the coffin of a man named Edmund Bickerstaff. They agree to take the case and quickly locate the man's gravesite. There, Lucy, who is a "listener" capable of using psychic abilities, detects what she calls a "psychic hum." While looking over the man and his coffin before sealing it, Lucy hears someone (probably in the ghost realm) say “Look! Look! [into the mirror in the man's coffin] You will find your heart’s desire!” Lucy doesn't fall for the obvious ploy, but several of her team members do, causing them to be ghost locked, thus rendering them unable to move. A Source also gets loose due to the mistake of one of Lockwood and Co.'s people, frightening them. That Source is the namesake whispering skull.
The Whispering Skull begins to speak with everyone in Lockwood and Co. but pays particular attention to Lucy (likely because of her psychic abilities). The Whispering Skull is a type 3 ghost capable of doing quite a bit of damage. But the skull will also be a useful tool for Lockwood and Co. as they navigate the perils of hauntings and other cruel ghosts.
In the meantime, an investigator from the Department of Psychic Research and Control orders Lockwood and Fittes to find the mirror which had previously caused people to ghost lock. While they work to obtain the mirror and deal with the hauntings, Lockwood and Co., as well as people from Fittes, encounter several unsavory characters, many of whom threaten them physically and mentally.
With the help of the Whispering Skull, Fittes, Lockwood and Co. are successfully able to find the mirror. Instead of giving it to an agent from the Department of Psychic Research and Control, they decide to smash the mirror. It was the Whispering Skull that told Lucy to smash it rather than give it to the agent. Lucy smashes the mirror from the grave of Mr. Bickerstaff.
As a result of her actions and her fearlessness in the face of tremendous danger, Lockwood decides to never keep secrets from his cherished employees anymore. He takes them to a secret room which he had previously told them was forbidden. There, they learn things they never knew before, including about other demons, which sets the stage for the next novel in the series.
