Benny is pulled out of the sea on the colony world Tyler's Folly and is taken to Republican Security headquarters for interrogation. Inspector Pupp suspects that she's a harbinger of a major Imperial invasion, and doesn't believe her claims that Tyler's World is hollow and populated by prehistoric monsters. She agrees to tell him the whole story, but warns him that it's frankly unbelievable...

According to Bernice, it started when two of her students, Ash Juliandis and Lucretia Scannon, found what appeared to be the lost journal of the legendary schlockmeister Nils Kryptosa at the Xan Burrosa flea market on Dellah. The entries implied that Kryptosa had learned that Tyler's Folly was an actual hollow world, perhaps the source of all the Inner World legends. But Lucretia was kidnapped by others determined to acquire Kryptosa's journal, and Benny and Ash were forced to follow the trail to Tyler's Folly to investigate. There, they were trapped in a collapsing atoll after an attack by a mysterious submarine -- and were rescued by the legendary Mr Misnomer, star of a pulp fiction series.

Descending further into the atoll, they fell into a gravity well which transported them into the Inner World of Tyler's Folly. Benny and Mr Misnomer were separated from Ash and captured by the same people who had kidnapped Lucretia -- the SSSSSSS, a neo-Nazi organisation. The leader of the SSSSSSS expedition, Kommander Katastrophen, believed that Tyler's Folly was the original home of the Aryan supergiants, and the Pool of Life from which the master race had sprung. But the SSSSSSS submarine was then attacked by primitive cavemen and seriously damaged by their exploding shellfish, and the few survivors were forced to join forces with Benny, Lucretia and Mr Misnomer to remain alive. According to Kryptosa's journals, there were two tribes in the Inner World -- the primitive Tribe of Gug, and the far more advanced Tribe of Lilith, whom Katastrophen believed were the Aryan giants.

Ash, meanwhile, encountered two representatives from the world of the People -- the psychologist Fos!ca and the psychotic !X. Fos!ca, who belonged to the Department Of [Entirely Optional] Corrections, found she was utterly unprepared for !X's casual savagery and the nature of the world beyond her utopia. !X threatened to kill Ash for no reason whatsoever, just to make a point -- as if he was only concerned with letting her know that she could die at any time. They were captured by primitives, a deformed offshoot of the Tribe of Gug who seemed to welcome !X as one of them. !X nearly allowed them to sacrifice Fos!ca and Ash to their god, MEPHISTO, but then killed the primitives at the last minute; Ash's and Fos!ca's terror made them a part of the process, and Ash learned the truth about MEPHISTO.

Benny suspected that the Inner World was artificial and came to realize that Katastrophen was simply going through the motions, following the SSSSSSS out of a desperate need for something solid to believe in. They were then attacked by apemen bearing freezing-weapons... and this part of the story Benny finds hard to tell later, as Mr Misnomer just picked up a gun and opened fire despite Benny's attempts to warn him that the apemen had intelligent looks in their eyes. Mr Misnomer and Benny fled into the tunnels, where they were attacked by giant bats -- but Benny sensed a power looking back at her through the bats' eyes. Their every move had been observed by the Eldest of the Tribe of Lilith, and when they sensed Benny looking back at them, they decided that everybody must be taken alive in case they were part of MEPHISTO's process.

Ash was rescued from the jungle by the Tribe of Lilith and taken to their base, on a giant organic dirigible. Lucretia and Katastrophen had also escaped the attack at the camp, but they too were taken to the dirigible, where Katastrophen snapped upon realizing that the apemen who attacked him are in fact the Tribe of Lilith. He fled via a transmat, taking Lucretia with him and realizing too late that she suffered from "molecular vertigo", an unreasoning terror of death by teleportation. She was thus forced to face her greatest fear and found that she has no choice but to cope with it on the other end. Katastrophen, however, learned that all of his beliefs were hollow, as the transmat took him to the Pool of Life -- created by the Tribe of Lilith from the remains of Nils Kryptosa, who informed Katastrophen that there were no Aryan supermen here and that he didn't even have a real German accent.

Katastrophen and Lucretia were returned to the dirigible, along with Ash, Benny and Mr Misnomer. The ship then entered the sun in the heart of the Inner World, and the sun turned out to be an Inner World of its own with a mad computer named MEPHISTO at its heart. MEPHISTO was malfunctioning, causing earthquakes on the surface of Tyler's Folly and gravity glitches in the Inner World. !X was waiting for them, having climbed a gravity cone to reach MEPHISTO; he claimed to be a part of the process and allowed MEPHISTO to tell its story in human terms. Due to the cultural filter it appeared to be the story of a fallen angel who created its own realm to mimic that of God's Heaven, but Benny interpreted this to mean that it was a drone-ship from the world of the People which created its own mini-Dyson sphere on Tyler's Folly to mimic the People's.

Since MEPHISTO apparently required human thoughts and concepts to shape its world, it sent killer robots after Benny and the others to absorb them into its process. But when Lucretia was placed in immediate danger, Mr Misnomer snapped, attacked MEPHISTO, and pulled its self-destruct switch (which every self-respecting mad computer must naturally possess). As the countdown to destruction began, Benny and the others fled to the dirigible and escaped, leaving !X with MEPHISTO, and as they passed through the gravity glitches, the dirigible and their minds were bent out of shape and all minds contacted each other for a brief moment. Benny took this opportunity to change her own memories of what happened in order to cover up the messy details of reality which she didn't want to face. On the way out of the sun, however, they were caught up in the explosion of MEPHISTO, and as the dirigible began to crash, Mr Misnomer gave his life to stay on board and keep it in the air long enough for Benny, Ash, and Lucretia to get to the gravity well and escape back onto the surface.

Pupp finds it impossible to discount Benny's story, despite the impossible events and the plot holes such as Katastrophen's disappearance from the narrative. But then !X arrives, incapacitates Pupp and the guards and locks himself up in Benny's cell with her. Benny is forced to admit to herself that she'd rewritten her own memories to make herself look better. There was no Mr Misnomer; inspired by Ash's thesis-in-progress on the archetypes of pulp fiction, she'd simply slotted the hero of the series into her memory to fill the gaps. It was Benny herself who thoughtlessly opened fire on the Tribe of Lilith at the SSSSSSS campfire, and it was Katastrophen -- a Nazi, the same as the people who tortured Benny in 1941 -- who, realizing that all his beliefs were false, attacked MEPHISTO to save Lucretia's life and gave his own life to pilot the dirigible while the others escaped.

!X now reveals the rest of the truth. MEPHISTO was not the computer at all, but the idea of the Inner World itself, created by an ancient race that dealt in metaphors and concepts rather than material technology. MEPHISTO represents the idea of Dystopia, the sneaking doubt that all of one's deeply held beliefs are actually invalid and that the world is hollow at its core. MEPHISTO is the need to find something wrong even in utopia -- Mankind Expects Pain, However It Appears To Outsiders. !X now prepares to kill Benny, but she realizes that he in fact wants her to take the gun and kill him instead, thus becoming MEPHISTO's carrier and spreading the archetype out through the galaxy.