Time's Arrow follows the life of a German man named Odilo Unverdorben; however, it does so in reverse, beginning with his death and old age and ending with his early childhood and infancy. The book is narrated by an entity that seems to be Odilo's soul, a kind of second consciousness, though it has no access to Odilo's thoughts and no ability to take any action. It behaves as something “along for the ride,” as it makes commentary yet may not do anything itself. Because it sees Odilo's life in reverse order, the narrator always interprets effects as causes or vice versa, and destruction as creation. The narrator follows Odilo, who is called Tod T. Friendly when the book begins (in his old age), through several changes in identity and locale, further and further into the man's past, urging us to wonder why the man moves so much and from what he might have been running. The narrator begins the story when Tod is an old man, who has seemingly been resuscitated after a cardiac event. Of course, the narrator has witnessed Tod’s death in reverse so he returns to life before his death. Tod appears to be a typical older gentleman in “washing-line and mailbox America,” or the suburbs. The narrator observes Tod go about a seemingly typical existence in reverse, going to the store, tipping his hat at people, though there is something else there. The entity cannot control Tod, nor can he read his thoughts, but he can feel his emotions. Whenever Tod is looked at, he feels intensely shameful and afraid. As time goes backward, Tod gets younger and stronger. Occasionally, Tod will receive an ominous letter from New York that informs him “the weather is temperate.” This is a code, meaning that whatever Tod is running from has not caught up with him yet.

Tod undergoes several name changes. He and the narrator arrive in New York—on a train going backward—and Tod becomes John Young. John’s work as a doctor appears to be in question. He wants to continue his work, though he fears being found out. A Reverend advises that he leave New York to avoid suspicion surrounding his citizenship (this is where Tod has just come from). John and the soul-like entity embark on a ship to Europe. In Europe, he undergoes further name changes until he reaches his given, German name: Odilo Unverdorben.

As the narrative approaches Odilo's distant past, the narrator feels that life is making more sense than it did in Odilo's old age and that everything in Odilo's life seems to have been designed to prepare him for it: that past includes his life as a doctor in Auschwitz who conducted "experiments" on Jews and was responsible for the torture and death of thousands of people. The narrator, of course, misunderstands this and believes that Odilo is capable of creating life (rather than destroying it) and does so because he genuinely loves people. The atrocities that Odilo committed have haunted him throughout the entirety of his life. He has attempted to evade persecution and punishment (as he died an old man in America) yet never lived like a normal person. The entity, still unable to influence Odilo’s decisions, knows something is wrong with Odilo but lacks the perspective to understand just how horrible his actions are. The book ends with Odilo’s birth: a return to the darkness from which he came.