The book follows three children, Gladys, Freda, and Tommy, alongside their collection of animated toys and pets, most notably John James, a large golliwog who secretly edits a publication called The Golliwog News. The narrative unfolds through a series of extraordinary excursions and events into magical, anthropomorphic realms inhabited by dolls, teddy bears, birds, and sea creatures. From solving the mystery of stolen gold buttons from a sailor doll by a mischievous teddy bear, to traveling by the Golliwog and Teddy Bear Railway to Toy-Town-on-Sea, Fish Town, and Birdland City, the characters find themselves immersed in bustling society meetings, football matches, and theatrical performances. Key episodes include a visit to the Dolls Parliament where toys debate important legislation, an eventful trip to the seaside featuring a dog concert, and a dramatic production of the traditional tale of Cock Robin at the Hall-in-the-Wood.
Throughout these adventures, the boundary between the nursery world and a bustling, independent toy society blurs. The children navigate humorous mishaps, political arguments among frogs and cats, and unexpected encounters with characters like Father Neptune and Father Christmas. The narrative builds toward a grand Christmas party hosted by John James, uniting all the eccentric personalities of the toy universe in a cheerful celebration.