The story takes place in the setting for many King stories: the fictional town of Castle Rock, Maine. Revolving around two local families, the narrative is interspersed with vignettes from the seemingly mundane lives of various other residents. There are no chapter headings, but breaks between passages indicate when the narration switches to a different perspective.
In the summer of 1980, the middle-class Trentons have recently moved to Castle Rock from New York City, bringing with them their four-year-old son, Tad. Vic Trenton discovers his wife, Donna, has recently had an affair with a tennis player named Steve Kemp. In the midst of this household tension, Vic's advertising agency, Ad Worx, is failing due to a scandal over a cereal called Red Razberry Zingers. Vic, and his business partner Roger Breakstone, are forced to travel out of town, leaving Tad and Donna at home alone.
The blue-collar Cambers, meanwhile, are longtime residents of Castle Rock. Joe Camber is a mechanic who dominates and abuses his wife, Charity, and their ten-year-old son, Brett. Charity wins a $5,000 lottery prize and uses the proceeds to trick Joe into allowing her to take Brett on a trip to visit Charity's sister, Holly, in Connecticut. Joe acquiesces and secretly plans to use the time to take a pleasure trip to Boston with his friend, alcoholic WW2 veteran Gary Pervier.
While the Cambers are getting ready for their respective trips, their dog Cujo, a large good-natured Saint Bernard, chases a wild rabbit in the fields around their house and inserts his head in the entrance to a small limestone cave. A bat bites him on the nose and infects him with rabies. Charity and Brett leave town, and while they are gone, Cujo kills Gary, and eventually Joe as well.
Donna, home alone with Tad, takes their failing Ford Pinto to Joe for repairs. The car breaks down in the Cambers' dooryard, and as Donna attempts to find Joe, Cujo appears and attacks her. She climbs back in the car as Cujo starts to attack. Donna and Tad are trapped in their vehicle, the interior of which becomes increasingly hot in the summer sun. During one escape attempt, Donna is bitten in the stomach and leg, but manages to survive and escape back into the car. She plans to run for the house but abandons the idea because she fears the door will be locked and that she will be subsequently killed by Cujo, leaving her son alone.
Vic returns to Castle Rock after several failed attempts to contact Donna and learns from the police that Steve Kemp, the man with whom Donna was having an affair, is suspected of ransacking his home and possibly kidnapping Donna and Tad. To explore all leads, the state police send Castle Rock Sheriff George Bannerman out to the Cambers' house, but Cujo attacks and kills him. Donna, after witnessing the attack and realizing Tad is in danger of dying of dehydration, battles Cujo and kills him. Vic arrives on the scene with the authorities soon after, but Tad has already died from dehydration and heatstroke. Donna is rushed to the hospital, and Cujo's head is removed for a biopsy to check for rabies prior to the cremation of his remains.
The novel ends several months later with both the Trenton and Camber families trying to move on with their lives. Donna has completed her treatment for rabies and her marriage to Vic has survived. Charity gives Brett a new, vaccinated puppy named Willie. A postscript says that the hole Cujo chased the rabbit into was not discovered. It also reminds the reader that Cujo was a good dog who always tried to keep his owners happy, but the ravage of rabies drove him to violence.