The story begins when several people gather around the fireplace. Douglas offers to read the manuscript, which, according to this man, describes some eerie and mystical things. This manuscript he received from a woman, who died twenty years ago. She claimed that it describes real events that happened to her.
After the death of his younger brother and his wife, a wealthy London dandy becomes a guardian of young nephews - Miles and Flora. He brings them to his country estate and sends servants to them headed by housekeeper Mrs. Grose. The children also had a governess (nanny), but she died very soon.
Guardian began searching for a new nanny and choose a daughter of a poor village pastor, a girl of twenty years. (it is she will send in the future manuscript to Douglas). The girl had been promised a decent salary and different benefits of living in an aristocratic manor. But the man put several conditions: she should never bother him, and she must not ask about something, complain, write letters under any circumstances. All problems she must have to solve by herself or with a help of Mrs. Grose. The girl agrees to all these conditions and begins to work.
Almost immediately, comes a letter from the school, which says that the Miles (one of the children) was expelled for such unpleasant thing, that the school management refused to even talk about it. Soon after that the other child Flora starts to see people she never sees before…