Departing from her earlier themes of lesbian and gay fiction, Waters' fifth novel features a male narrator, a country doctor who makes friends with an old gentry family of declining fortunes who own a very old estate that is crumbling around them.

The stress of reconciling the state of their finances with the familial responsibility of keeping the estate coincides with perplexing events which may or may not be of supernatural origin, culminating in tragedy.

Reviewers note that the themes in The Little Stranger are alternately reflections of evil and struggle related to upper class hierarchy misconfiguration in post war Britain.

Faraday is invited to tea by Caroline Ayers, the plain, practical daughter of the family, and meets her sardonic brother Roderick and their widowed, genteel mother.

Disaster suddenly strikes when Gillian is mauled by Caroline's ancient and previously gentle labrador retriever, Gyp, receiving a disfiguring bite to the face.

Roderick begins to behave moodily and drink heavily, and a concerned Caroline shows Faraday that she has discovered spots on his walls and ceiling that looking like burns in the wood.

She experiences shadows, tapping and running footsteps behind the locked door, culminating in hearing a whispering childlike voice through the speaking tube.

Faraday believes the wounds are self-inflicted, and convinces a reluctant Caroline to put her mother in a care home for her own safety so that they may live peacefully at Hundreds after they marry.

The next morning, Caroline wakes to discover her mother has hanged herself in her bedroom, and that her body bears the marks of a number of seemingly-self-inflicted wounds, scratches and bites.

The day Faraday brings her the wedding dress and ring he has selected for her, she breaks off their engagement, telling him she does not love him and announces she plans to sell Hundreds Hall and move abroad.

Sara O'Leary in The Gazette states that Waters' narrative voice is her strongest asset and that she has an "uncanny ability to synthesize her research and is never expository in the telling details she draws upon—tiny little things about what people wore or ate or had in their houses".

Ron Charles states that the novel is not cliché due to Waters's restraint: "the story's sustained ambiguity is what keeps our attention, and her perfectly calibrated tone casts an unnerving spell".

[4] A similar review appeared in The Australian calling attention to Waters' "moderation and flawless cadence" that forms "a story pulsing with malevolent energy" and an "atmosphere is wickedly, addictively tense".

She has never made bones about borrowing", noting that her inspirations for this story were Daphne du Maurier, Henry James, Agatha Christie, and Charles Dickens.

Peter Cannon in Publishers Weekly writes that the novel is evocative of Henry James' The Turn of the Screw and Shirley Jackson's The Haunting of Hill House.

Eventually Faraday wonders if it is "consumed by some dark germ, some ravenous shadow-creature, some 'little stranger' spawned from the troubled unconscious of someone connected with the house itself".

Ron Charles in The Washington Post considers Faraday's deep concern for the family that is often mixed with envy to be influenced by Patricia Highsmith's psychopathic manipulator Tom Ripley.

Faraday's mother was at one time a nursery maid at Hundreds Hall, much like Waters' grandparents who were domestics in a country estate;[12] the reader is first given a description of its opulence when the narrator is a child and he attends a garden fête, and is so entranced with the building he plies a piece of it off and puts it in his pocket.

[3][14] Near the end, as Faraday attempts to explain reasonably and scientifically why the family for which he has grown so fond is falling apart, he wonders what must be eating them alive; a friend blurts, "Something is....It's called a Labour government.

"[3][15] Barry Didock notes that Waters captures the stark mood of postwar Britain that Evelyn Waugh highlighted in Brideshead Revisited, where the social changes being wrought did not make the future seem optimistic at all.

[14] Waters concedes that although her novels are all period pieces, they are not meant to instill an overwhelming romantic sense of nostalgia: "I'd hate to think that my writing's escapist.

Not enjoying expository writing, she attempted fiction and finding that she liked it, followed Tipping the Velvet with Affinity, another Victorian-set novel with gothic themes, and Fingersmith, also Victorian yet more of a Dickensian crime drama.

"[7] She had originally set out to rewrite a version of The Franchise Affair by Josephine Tey, which is a courtroom thriller about a middle-class family accused of kidnapping a young girl.

[22] Ron Charles in The Washington Post calls The Little Stranger "deliciously creepy", stating that the tale is "one screw away from The Fall of the House of Usher".

[4] Erica Wagner, a reviewer for The Times confesses that "left alone one night in [her] boxy Seventies ex-council house—about as unspooky a place as you can imagine—had to stop reading for fright".

[23] Corinna Hente in The Herald Sun writes "This is a terrific, chilling read you can get lost in, from a first-class storyteller", although she accedes that the novel is slow to start and readers may be disappointed with the ambiguous ending.

[24] Charlotte Heathcote calls Waters "a darkly masterful storyteller with a rare gift for bringing a bygone era to vibrant life".

[14] Kirkus Reviews was similarly pleased with Waters's detail, but considered the relaxing of tension in crucial places and Faraday's sometimes second-hand narration of events in Hundreds Hall flawed.

They write, however, that Waters "work[s] in traditions established by Edgar Allan Poe, Sheridan le Fanu and Wilkie Collins, expertly teasing us with suggestive allusions to the classics of supernatural fiction.

"[26] Following Fingersmith and The Night Watch, The Little Stranger became Waters' third novel to be short-listed for the Man Booker Prize, a prestigious award for novelists from the British Commonwealth.