Little Diamond lives in a humble hay-loft above a coach-house, where the north wind blows straight through the rotting boards. One night, a knot falls out of the wall, and the North Wind speaks to him, claiming the hole as her window. Far from being frightened, Diamond strikes up a gentle conversation with the magnificent, motherly spirit of the wind. She soon takes him on her back, sweeping him through the midnight skies over London to witness her strange, stern work of cleansing and renewal.
During his adventures, Diamond encounters the harsh realities of poverty and suffering in the city. He meets a homeless crossing-sweeper girl and tries to help her, learning firsthand about human hardship and compassion. He wanders through great empty cathedrals and encounters strange dreams of ancient apostles, all the while growing more steadfast and mature through his trials.
Back in the real world, Diamond's father loses his job and the family faces severe destitution. Yet Diamond's strange experiences at the back of the north wind leave him strangely untroubled by want, trusting deeply in the underlying goodness of things. Through an unexpected turn of fortune, his father manages to buy back his old cab and his favorite horse, restoring their livelihood in a quiet way.
As Diamond grows older, his health fluctuates, but his inner peace remains untouched by the struggles around him. He visits Nanny, the crossing-sweeper girl, who is now recovering in a children's hospital and slowly transforming under gentle care. The narrative culminates in a quiet acceptance of the natural order, where suffering and hardship are ultimately swallowed up by a far-off, enduring song.
The story concludes with Diamond carrying the gentle wisdom of the North Wind into his everyday life as a cabman's son. Though the magical realm at the back of the north wind fades into the background of his conscious memory, its spirit continues to guide his perception of the world. He remains a steadfast comfort to his parents and a quiet friend to everyone he meets in the dusty London streets.