The Guernsey Literary and Potato Peel Pie Society is set in January 1946 as London emerges from the Second World War. Many London neighborhoods lie in rubble. The novel's protagonist, Juliet Ashton, is a moderately well-known writer who has lost her home and thirsts for new adventure. During the war, Juliet wrote a column under the pseudonym Izzy Bickerstaff. After the war's conclusion, her publisher and close friend, Sidney Stark, published the columns — known for being quite humorous — in a book called Izzy Bickerstaff Goes to War. As the novel opens, Juliet is searching for a more serious topic that she can write about under her own name.
The novel unfolds through a series of correspondences. Unexpectedly, Juliet receives a letter from a man named Dawsey Adams on the island of Guernsey. Guernsey, a farming community, is located on one of the islands located in the English Channel between France and Britain. Dawsey is a native who has come across her name inside a book by Charles Lamb. He writes to her because books are so rare on Guernsey, and he would like to gain more — particularly for the island's book club, The Guernsey Literary and Potato Peel Pie Society.
The plot of the novel unfolds through the letters of several other islanders who correspond with Juliet. The most central character that the islanders speak of is Elizabeth McKenna, a young woman who has already died by the time that Juliet begins corresponding with the people of Guernsey. During the German occupation of Guernsey, Elizabeth had been deported to a concentration camp, where she was later shot. Before her deportation, she had fallen in love with Christian, a German soldier, and given birth to their daughter, Kit. Kit was then raised for the first four years of her life by Dawsey and other Guernsey islanders. Through her ongoing correspondences with the islanders over several months, Juliet is drawn into the world of the eclectic members of the literary society. She learns that the club brings together a wide variety of islanders who found peace in literature during the horrific German occupation.
Through the multiple perspectives of islanders, Juliet learns the story of how the Guernsey Literary and Potato Peel Pie Society came about. When German soldiers controlled Guernsey during the occupation of the Channel Islands from 1940 to 1945, the islanders were held to a strict curfew and severely oppressed. They were not even allowed to eat their own livestock. However, several islanders thought of a clever scheme that could save a pig for themselves: When one farmer's pig died, several farmers would pass around its carcass, each reporting the death of their own personal pig to German officials. Farmers could then stow away one of their pigs to slaughter in secrecy and eat with neighbors. One night, the islander's feasted on one such hidden pig. German soldiers discovered the party and demanded to know why the islanders had broken curfew. Elizabeth McKenna quickly concocted a tale about their meeting being the first gathering of a new literary club on the island.
From then on, members of the newly established Guernsey Literary and Potato Peel Pie Society met every fortnight and grew close. Most members knew nothing of literature but discovered an author or genre that appealed to their personal taste. Literature lifted the islanders' spirits during the war — whether reading Charles Lamb or the Brontë sisters, each islander was able to find solace in such an enjoyable distraction. The Society members read books, argued about books, and indulged in good food. They were able to forget, if only for a brief period, the darkness of war.
After corresponding for several months with the society members about their personal occupation experiences, Juliet decides to visit her new friends. Upon her arrival, she quickly develops strong relationships and comes to realize that her old life in London no longer holds appeal. Most importantly, she grows exceedingly close to Kit, Elizabeth McKenna's daughter, and eventually applies for her adoption. Over her several months on the island, Juliet also falls in love with Dawsey and proposes marriage. Finally, Juliet realizes what she wants to write about in her next book: the life of Elizabeth McKenna, the woman whose life had been so central to life on Guernsey. Juliet's drastic life decisions while on Guernsey provide the joy and self-fulfillment she had been seeking all along. By the novel's conclusion, the happily married Juliet is dedicated to writing a new book that would honor the life of Elizabeth McKenna — a woman whose spirit and zest for life never left the island of Guernsey.