Nick and Allie get into a car crash. While going towards that light at the end of the tunnel, but they bump into each other and get knocked into a mysterious world between life and death called Everlost. Nick and Allie start exploring this new world, both hoping to find a way back to their normal lives. The world is filled with terror and unexpected twists for the souls that reside there. If they stand still in the living world for too long, they will sink into Earth. The longer they stay in Everlost, the more they forget about their past lives in the real world. Their clearest memories of themselves become reality in Everlost, and Nick worries about the now permanent chocolate stain on his face.
In the beginning of the book, they are saved by a boy named Lief, who tells them that they are called "Afterlights" who cannot walk where the living walk. They are somewhat like ghosts. He warns them of a dreaded and evil monster, the McGill, and Johnnie-O and the alter boys before they make their way to New York City. There, they meet Mary Hightower, the "mother" of Afterlights who keeps many Afterlights safe, and is author of hundreds of books about living in Everlost. She lives with the children under her care in the destroyed World Trade Center, which exists because things that are much beloved in the world can cross into Everlost when they are destroyed. They settle down, but Allie is not content. Allie notices other Afterlights at the Twin Towers keep repeating and doing the same exact thing every day, becoming stuck in ruts. Allie sets out to see is he has special power and they meet The Haunter. Allie gets Lief and Nick captured by The Haunter and learns that she can pick up living things and also possess living people, or "Skinjack" . Allie explores her power while Nick begins to discover his own purpose.
Allie is captured by the McGill, a grotesque monster who controls a ship full of Afterlights who fear him. The McGill has taken hundreds of Afterlights, including Nick and Lief prisoner. A fortune cookie in Everlost always tells the truth, and because of one the McGill believes he can come back to life is he collects a thousand souls. Allie is able to manipulate the McGill and grow close to him as she attempts to save Nick and Lief. The real identity of the McGill is revealed - he is a boy named Mikey McGill, Mary (really Megan) Hightower's younger brother. Mikey and Megan died at the same time; after they awoke as Afterlights Megan watched Mikey sank into the earth, unable to help. Unbeknownst to his sister, Mikey was able to claw his way out of the center of the Earth through pure force of will, but over time evolving into a hideous monster reflective of his anger.
Mary, also known by others as the Sky Witch, has been lying to the children. She steals the coins that all Afterlights invariably have wake up with. The coins will allow them to leave Everlost when they are ready, but Mary misguidedly believes that the light at the end of the tunnel is malicious and that children should stay in Everlost forever. Nick has also received the nickname "Chocolate Ogre" because of the chocolate stain on his face, and Mary spreads rumors about how he sends Afterlights away by luring them in with the smell of chocolate.
Allie outsmarts the McGill, who is unmasked by Mary and returned to the form of a human boy. Allie, traveling home, is later saved by Mikey, who agrees to accompany her the rest of the way to her home.