The story was first published in Harper's Bazaar in 1921 featuring illustrations from Williams' daughter Pamela Bianco.

The wisest and oldest toy in the nursery is the Skin Horse, which was owned by the boy's uncle, and who tells the rabbit (whom he feels sorry for) about toys being made Real by the love of children: "Real isn't how you are made...

The doctor orders that the boy should be taken to the seaside and that his room should be disinfected — all his books and toys burnt; including the velveteen rabbit.

The rabbit is bundled into a sack and left out in the garden overnight, where he reflects sadly on his life with his boy.

The toy rabbit cries, a real tear drops onto the ground, and a marvelous flower appears.