Paper Towns takes place in Orlando, Florida. The novel begins in a subdivision called Jefferson Park. The protagonist and narrator, Quentin "Q" Jacobsen, and his neighbor Margo Roth Spiegelman, both nine years old, go to the park and discover the corpse of Robert Joyner, a divorced man who has committed suicide. The novel flashes forward to Quentin and Margo as high schoolers who have grown apart. One night Margo shows up at Quentin’s bedroom window wearing all black and black face paint. She convinces him to sneak out and help her get revenge on people she feels have hurt her.
The first characters they visit are Margo’s ex boyfriend Jase and the girl with whom he was cheating on Margo, Becca. Margo has Quentin call Becca’s father and inform him that Becca is having sex with Jase in the basement of their home. Then Quentin and Margo break into their home, graffiti a blue ‘M’ on their wall, and leave a fish for Becca. The second person they visit is Karin, a character mentioned only once throughout the story. They leave her a bouquet of flowers, as she is the character who informed Margo that her boyfriend was cheating on her. After that they go to Jase’s house, break in and leave him a fish and a blue ‘M’. They then visit a character named Lacey, who becomes a more prominent character in the last half of the book. Margo felt that Lacey had never been a good friend to her, and that she had ridiculed her too often and made backhand comments that were truly meant as insults. They leave a fish for her in her car and graffiti a blue ‘M’ on the roof of her car. At 3:15 in the morning, they enter the SunTrust bank building and they relax on one of the higher floors for a short while. This is the first time Margo calls their town a "paper town", describing it as “fake” and “not even hard enough to be made of plastic”. Once they leave the SunTrust building, Margo asks Q who he would like to get revenge on, and he chooses the high school bully Chuck Parson. Margo and Q sneak into his house, remove one of Chuck’s eyebrows with hair removal cream, and slather Vaseline on all of the door handles in his house. After getting revenge on Chuck they break into SeaWorld, but leave disappointed because none of the animals are in their showcases.
Margo and Q return to their homes close to the time they are supposed to be getting up in the morning to go to school. The next day at school all Q thinks about is how things have changed. He wonders if Margo will start hanging out with him and his friends and sitting with them at lunch, but Margo doesn’t show up to school that day. After Margo has been missing for three days her parents file a report. Margo had run away five times in the past so her parents were more frustrated than worried. After learning that Margo has run away, Q notices a poster of Woody Guthrie taped to the back of her shades. The poster leads him to a song called Walt Whitman's Niece, which, in turn, leads him to a book of poems, Walt Whitman's Leaves of Grass. The poem has highlighted sections that Q believes to be clues left by Margo to lead him to where she is. Q continues to search for clues and finds an address scrawled on a small piece of paper. Hoping it will lead them to where she is hiding, Q and his friends Radar and Ben skip school the following day and go to the place on the piece of paper. They find an old abandoned mini-mall which contains evidence that Margo was recently there.

Eventually the clues lead Q to believe that Margo may be hiding out in one of the many abandoned subdivision projects around Orlando; what Q’s mother likes to call "pseudodivisions". He drives to all of the pseudodivisions where he feels she may be hiding, but has no luck locating her. While getting ready for graduation, Q makes a connection which leads him to discover that Margo has been hiding in a fictional town in New York called Agloe. Q, Radar, Ben, and Lacey all opt to skip graduation to drive to New York to search for her. They make the drive from Orlando, Florida to Agloe, New York in just shy of twenty-four hours. They find Margo living in an old dilapidated barn. But instead of being grateful for them finding her, she reacts negatively. Angry that Margo is not grateful for all their efforts to find her, Radar, Ben, and Lacey leave and spend the night at a motel. Q stays behind and talks things over with Margo. She decides to stay in New York. Margo and Q kiss and Q wants to stay with her, but returns home with his friends in the end.