The title character, Charles Dexter Ward, is a young man from a prominent Rhode Island family who (in the story's introduction) is said to have disappeared from a mental asylum after a prolonged period of insanity accompanied by minor, but unheard-of, physiological changes. The bulk of the story concerns the investigation conducted by the Wards' family doctor, Marinus Bicknell Willett, in an attempt to discover the reason for Ward's madness and the physiological changes. When Willett learns that Ward had spent the past several years attempting to discover the grave of his ill-reputed ancestor, Joseph Curwen, the doctor slowly begins to unravel the truth behind the legends surrounding Curwen, an eighteenth century shipping entrepreneur rumoured to have been an alchemist, but in reality a necromancer and mass-murderer.
As Willett's investigations proceed, he finds that Charles had recovered Curwen's ashes, and through the use of magical formulae contained in documents found hidden in the wizard's former town house in Providence, Rhode Island, was able to call forth Curwen from his "essential saltes" and resurrect him. Willett also finds that Curwen, who resembles Charles enough to pass for him, has murdered and replaced his modern descendant and resumed his evil activities. Unfortunately for Curwen, due to culture shock, he is unable to entirely successfully impersonate Charles - his lack of understanding of the modern world leads to him (as Charles) being certified insane and imprisoned in an asylum.
While Curwen is locked up, Willett's continuing investigations lead him to a bungalow in Pawtuxet Village, which Ward had purchased under the influence of Curwen. It turns out that this house is on the site of an old farm which was Curwen's headquarters for his nefarious doings; beneath is a vast catacomb that the wizard had built to serve as his lair during his previous lifetime. During a horrific journey through this labyrinth, Willet discovers the full truth about Curwen's crimes and also the means of returning him to the grave. During the expedition it is also revealed that Curwen has been engaged in a long-term conspiracy with certain other necromancers (associates from his previous life who have somehow escaped death) to raise and torture the world's wisest people in order to gain knowledge that will let them gain horrible power and threaten the future of mankind. Finally, while in Curwen's laboratory, Willett accidentally raises an ancient spirit (its identity is not made clear) which is an enemy of Curwen and his fellow necromancers. The doctor faints at this eventuality: he wakes up back in the bungalow. Willett finds that the entrance to the vaults has been sealed as if it had never existed, but finds a note from the spirit written in Latin in an Anglo-Saxon hand telling him to kill Curwen and destroy his body.
Armed with this knowledge, Willett confronts Curwen at the asylum and succeeds in reversing the spell, reducing the undead sorcerer once again to dust. News reports reveal that Curwen's prime co-conspirators have met brutal deaths along with their households and their lairs have been destroyed, presumably the work of the spirit whom Willett raised.