Nine year old Lizzie is what her grandmother calls a born liar. She lies to get out of trouble, to make herself seem more important, to entertain people, and just for the hell of it.
As the story begins, Lizzie is taking verbal slings and arrows from her grandmother, Nana, an unpleasant old woman who lives with Lizzie and her parents. Nana never has a kind word to say to Lizzie and is constantly harping on her appearance ("she's not the prettiest girl in the world") and the things she does to get into trouble. To compensate for this, Lizzie tells a lie to her mother that she has been chosen as the star role in a dance assembly at school.
Lizzie and her friend Sara find a stray cat while playing at an abandoned construction site. Lizzie and Sara take the cat to Lizzie's house to plead her case about possibly staying. Nana has a fit and banishes the cat outside. To convince Sara that her mother will take the cat in, Lizzie tells her an elaborate story about how when her mother was a child, she had a kitten whom a crazy relative murdered in front of her. By the way, Lizzie's mother volunteers several afternoons a week at a hospital, and it seems maybe the author is saying that this is one of Lizzie's problems that have lead her to become a pathological liar.
Lizzie's mother arrives home (from work - poor Lizzie), declares that she hates cats and has no idea what Sara is talking about when she mentions the traumatic childhood incident. Lizzie successfully interjects herself into the conversation and sways the subject away from her lie. Lizzie's father gets home and gently agrees with his wife and mother-in-law. No cat for Lizzie. The next day, she makes up a lie about her parents loving the cat but wicked Nana ruining the scenario by refusing to offer the creature a home. Lizzie has told so many lies that she must avoid Sara to keep her from finding her out.
However, one day Sara's mother has something to do (those darn modern mothers!) and drops Sara at Lizzie's house for the day. The girls play an imaginative game of cowgirls, but find they need some rope to tie up a pretend captive. Lizzie gets some clothesline, lying to Nana that her mother specifically said she could play with it. Sara ties Lizzie up too tightly and can't get the rope undone. Lizzie tells her she must go to another room to get the sharp scissors, and just for kicks, makes up a lie that Nana was the kitten killer from years past. Sara returns with the scissors and before she can get Lizzie untangled, Nana walks in. Nana overreacts as usual, acting as though something kinky had been going on.
Fed up with the lies, Sara shuns Lizzie the next day at school. Lizzie is so upset that she comes home and confesses that the dance assembly she'd been practicing for for weeks was all a big lie. Her clueless (working) parents are stunned. Nana is quietly accepting of the situation. She acts contrite for calling Lizzie a born liar. Lizzie is so out of sorts that her "Adam's apple bumps up and down her throat". This is a story about a girl, right? Lizzie's parents promise to help her try to stop lying. The book ends with Sara and Lizzie going back to the construction site to look for the cat. They never find her, but they become friends again.
