Miles Wednesday, an orphan boy who has recently escaped from the cruel Pinchbucket's orphanage, is the only one who witnesses the arrival of the Circus Oscuro in town one night.

He is promptly visited by a tiger with the ability to talk; he considers making Miles his next meal, but leaves him alone after he "smells the circus in him".

He sees a small girl performing acrobatic stunts fall from the top of the tent and tries to catch her.

Miles stays hidden and sees the acrobat, who calls herself "Little", being tied up and taken back to her wagon when the show ends.

Angered at being tricked and losing one of his stars, Cortado unleashes a monstrous beast called The Null to chase after Little and Miles.

Miles takes Little to a friend of his, a widow called Lady Partridge, who lives with her many cats in a treehouse made of her own antiques.

Miles also runs into an old friend of Lady Partridge, an elderly former explorer named Baltinglass of Araby, who eagerly aids them.

The Great Cortado uses a method he has devised with the mysterious Dr. Tau-Tau to make people laugh uncontrollably and steal the laughter and happiness out of their souls.

They lock up Genghis and Cortado in the local asylum since they can't answer to any accusations after falling victim to their own scheme.

After one more talk with the enigmatic tiger (who Miles suspects is Varippuli), he promises to find what happened to his father and make Little's life on earth as happy as it was in the heavens.