[1][2] Basil Elton, a lighthouse keeper, engages in a peculiar fantasy in which a bearded man in robes is piloting a mystical white ship which appears when the moon is full.

Elton walks across the water on a bridge of moonbeams, joins the bearded man on the ship, and together they explore a mystical chain of islands unlike anything that can be found on Earth.

They finally settle in Sona-Nyl, the "Land of Fancy", where Elton spends a period of time which he describes as "many aeons", living in what seems to be a perfect society.

After a perilous journey to where the crew believes Cathuria to be, the ship instead finds itself at the edge of the world, and plummets to its doom.

The tone and temperament of "The White Ship" speaks largely of the Dream Cycle literary structure that Lovecraft utilized in other stories such as The Dream-Quest of Unknown Kadath (1926) and "The Cats of Ulthar" (1920).