The Phantom is born as Erik in Boscherville, a small town not far from Rouen, in the summer of 1831. His father is a well-known stonemason and dies in a construction accident a few months before his son is born. His mother is the beautiful and talented daughter of an English woman and a French architect. A spoiled and vain woman, she scorns her deformed child from birth and cannot bring herself to name him. Instead, she instructs the elderly priest who baptises him to name the child after himself. Due to his mother's shame but also for his own safety, Erik is forced to spend his childhood locked in his home lest he or his mother become a target for the violent attentions of the very superstitious villagers of Boscherville.
Much of the verbal and physical abuse Erik suffers from his mother is chronicled in the opening chapters of the novel. One such event occurs on his fifth birthday when he refused to wear the cloth mask to the dinner table. His mother drags him before the only mirror in the house in retaliation and upon seeing his visage, Erik mistakes his reflection for that of a horrible monster. He shatters the mirror, lacerating his hands and wrists, and his mother is unable to bring herself to tend to his wounds. A family friend, Marie Perrault, bandages the wounds and saves his life, but Erik is left forever physically and emotionally scarred from this event. After this, Erik becomes morbidly fascinated with mirrors and believes that they are capable of performing magic. This fascination turns into an obsession and Erik quickly becomes a master of illusion, able to make people see only what he wants them to see. Says Erik of his abilities, "I can make anything disappear, if I really want to. Anything except my face."
From a young age, Erik exhibited a strong interest in architecture and was privately tutored by a well-respected professor. However, his strongest abilities lie in the subject of music and he is an incredibly talented composer and performer. However, his mother does not encourage his pursuit of singing, claiming that his supernaturally beautiful voice cannot be one created by God.
When he was nine years old, Erik's mother begins to receive the attentions of the handsome, new town physician. This doctor makes it clear that he believes that a child such as Erik belongs in an institution for the mentally insane, and Erik begins to desperately try to win his mother's affections. He uses his rapidly developing skills of ventriloquism to create the illusion of a perfect home and family. His mother begins to surrender her links on sanity but is forced to awaken when an attack on her home by a superstitious mob of villagers leaves the family dog, Sasha, dead and Erik seriously injured. The doctor comes to Erik's aid and saves his life, but begs his mother to marry him and send her child to an institution. Experiencing a sudden change of heart and pangs of remorse, Erik's mother cannot bring herself to abandon her child and refuses the proposal. She resolves to make amends for her treatment of her child, but discovers the next morning that Erik had run away. It is not until much later in the novel that it is revealed that Erik left believing that she had accepted the proposal of the doctor and had hoped to free her so that she may live happily.
After a week or so without food and still healing from the attack, Erik stumbles upon a Gypsy camp in the woods. He is discovered as a thief and is unmasked. Upon seeing his severely deformed face, a freak show showman named Javert decides to exhibit him as the "Living Corpse" and Erik is forced to spend the next several weeks locked in a cage. Eventually, he gains some personal freedoms such as his own tent as he develops his show to include the illusions that he had begun to master as a child in Boscherville. He travels around Europe with the Gypsies and masters their languages as well as their herbal remedies. His quick mind and inhuman abilities garner him the fear of many of the Gypsy tribe. He remains with the tribe until he is about 12 years old, leaving only after he is forced to murder his master in order to evade rape.
Erik continues to join up with travelling fairs and while performing at a fair in Rome meets Giovanni, a master mason who would take the boy on as his apprentice. Erik quickly masters the aspects of the design and construction of buildings and stays with Giovanni until age 15. He spends a few happy years under the man's tutelage, but is forced to leave when he is inadvertently involved in the death of Luciana, Giovanni's youngest and favorite daughter. Erik's whereabouts are unknown for several years after this event, but it is assumed that he continued to travel throughout Europe and into Asia, occasionally performing with travelling fairs.
Four years later, Erik is sought out by the Daroga of Mazanderan Court and becomes a court assassin, magician, and personal engineer to the Persian Shah. He becomes responsible for the entertainment of the Khanum, the Shah's mother, and builds sophisticated traps and torture devices for her amusement. In addition he is involved in the design and construction of a palace for the Shah, throughout that time becoming involved in political affairs which make him a target for a poisioning attempt from which he nearly dies. Much of these years are a personal hell for Erik, and he soon becomes an opium addict. Erik eventually stops using opium due to his fear that it will damage his voice and switches to morphine.
After construction on the palace is finished, the Shah fears that Erik knows too many of his personal secrets and, with the influence of the Khanum, arranges to have him arrested and put to death. Nadir, the Daroga who has befriended him, helps him to escape the guards, and Erik eventually makes his way back to France.
Since early childhood, Erik has wished to eventually become the designer for a Paris Opera House. Unfortunately for him, the contest for the position is over by the time he learns of it in his perusal of his mother's old newspapers after her death. He approaches the winner, Charles Garnier, and makes a deal with him wherein he may help design and build the Palais Garnier Opera House. Below the Opera House, an artificial lake is created during its construction using eight hydraulic pumps because of problems with the ground water level that keep rising. Without the knowledge of the other workers, Erik builds a maze of tunnels and corridors in the lower levels. Past the underground lake, he builds a lair for himself, where he may live protected from the public. Ensconced here, he rides out the strife and misery of the 1871 Paris Commune.
Besides being a brilliant inventor and engineer, Erik is also a musical genius, and he is frequently involved in the affairs the opera house in order to listen to operas and interfere with the manager's bad taste. Because he cannot show his distorted face in public, he takes the disguise of a ghost, using violence in order to blackmail the opera managers and bind them to his will, exploiting the employees' superstitions to maintain his power and his knowledge about the building's secret passages for access to every part of the building without notice. With increasing amorality, he threatens those who refused his demands via letters and even kills some employees as warnings. However, he treats those who were loyal to him and obey his command, such as Madame Giry, very kindly.
The rest of the book is largely based around the original Phantom of the Opera novel - though it differs on several points - following the relationship between Erik and the object of his desire, Christine Daae, and switching back and forth between their points of view. Christine, timid and frail, is frightened of Erik - it is revealed that she is indeed in love with him, but she is frightened of her feelings, and is unable to come completely to terms with his appearance. Because of this, she pursues a relationship with Raoul de Chagny, a young nobleman, while still frequently visiting Erik in his underground home.
When Erik offers her a proposal of marriage, stating that it would be a temporary state of affairs (as he himself, owing to the prior poisoning attempt on his life in Persia, has begun to suffer extreme ill health and believes that he has roughly six months to live), Christine becomes agitated and returns to the world above. Considering his request to return to his home and give him an answer, whether it be "yes" or "no," Christine cannot bear the thought of hurting Erik by refusing him. She ultimately decides to flee with Raoul after her next performance, using it as her symbolic goodbye. Erik, however, has become aware of her plans and has been driven into a jealous, hurt frenzy; he kidnaps her during the performance and takes her to his home, while Nadir, who has been following Erik's activities, leads Raoul to the house underground in an attempt to free Christine.
When Nadir and Raoul fall into Erik's torture chamber, a device created specifically to drive its occupants insane and ultimately suicidal, it is revealed that Erik plans to blow up the entire Opera House if Christine does not agree to marry him. Christine finally agrees, and an underground chamber stocked with gunpowder begins to fill with water in order to douse the danger; the water begins to fill up the torture chamber as well, threatening Nadir and Raoul with imminent death by drowning. Christine, who has at last fully realized her feelings for Erik, kisses him passionately on the mouth (a change from the original Leroux novel, in which she merely bestows a chaste kiss on his forehead); this act changes Erik, making him realize the futility of further violence. He stops the water in the chamber, and rescues Nadir and Raoul from their fates, allowing Raoul to leave with Christine and stating his wish for the two young people to marry; his only stipulation is that he would like for Christine to visit him one more time before his death. Raoul agrees in order to placate him, even though he has no intention of allowing such a thing; once their wedding-day draws near, however, Christine backlashes against Raoul's insistence that she never see Erik again and goes herself to visit him.
When Raoul - who tells the remainder of the novel from his point of view - learns of Christine's return to Erik, he descends himself into the underground home to fetch her, but is detained by Nadir, who refuses to let him enter the room where Erik is dying. Christine emerges from this room some time later after Erik has died, and returns to the upper world with Raoul. They marry, and a few months later, Christine reveals that she is pregnant. Though both are overjoyed at the news, the pregnancy is very difficult for Christine, and she almost dies in childbirth. The doctor is forced to perform a Cesarean section in order to save her life and that of the child - Raoul is initially opposed to this, as he believes that the baby is premature and cannot possibly survive outside of its mother's womb - making the procedure an unnecessary risk on Christine's life - but the doctor assures him that the baby is full-term. This causes Raoul to realize, due to timing, that the child cannot possibly be his, and is in fact Erik's.
Despite this, Raoul raises the child as his own, never mentioning to Christine that he knows about the child's parentage. The boy, named Charles, has escaped his father's fate and is physically perfect. Christine dies when Charles is sixteen, and Raoul goes on to raise him. The last line of the novel is "The cuckoo is a very beautiful bird!" which carries the implication of cuckolding, and refers to the cuckoo bird's habit of laying its eggs in other birds' nests, but also of the beauty of adoption and acceptance.