The novel is set at the start of the twentieth century and deals with the orphaned boy Álfgrímur, his adoptive grandparents, and the small, tolerant community of misfits and eccentrics they gather around them at Brekkukot, their cottage on the outskirts of Reykjavík. As Álfgrímur begins to encounter the minor politicians, businessmen and social-climbers of the growing town of Reykjavík he starts to question his future as a fisherman's grandson, and is increasingly fascinated by Garðar Hólm, the celebrated Icelandic "world singer" whose sporadic returns to Iceland encourage Álfgrímur to pursue his own personal goals of self-expression. He discovers the true value of his boyhood experiences only as he sets out on a path that will take him away from them forever.
The boy's name, Álfgrímur, is explained in the book as a compound of Álf (elf) and grímur (a poetic word for 'night') meaning 'he who spends the night with the elves'. The original name of the book in Icelandic is Brekkukotsannáll (Annals of Brekkukot).