Most good stories start with a fundamental list of ingredients: the initial situation, conflict, complication, climax, suspense, denouement, and conclusion. Great writers sometimes shake up the recipe and add some spice.
Initial Situation
Lord Asriel returns to Oxford from the North. Lyra's Oxford is thrown into turmoil as children are being kidnapped.
Like any good fantasy novel, the first part of the book explains all of our big, new concepts: Dust (original sin), daemons (animal companions that are like souls worn on the outside), the multiple worlds theory, and the power of the Magisterium. Characters are introduced. We meet the powerful Lord Asriel, the well-intentioned scholars of Oxford, and the children Lyra and Roger. Lyra's defining character traits are sketched for us here – she exaggerates a lot, is adventurous, and is a natural leader. From the conversation we overhear between the Master and the Librarian, we know that she also has some kind of destiny to fulfill. With all of the emphasis on Lyra, we can tell right away that she'll be the novel's protagonist.
As for plot, we get some hints about the conflicts that will propel the book. Lord Asriel's conversation with the scholars suggests that this whole Dust thing is going to come up again. More grist for the plot mill: children are being abducted from Lyra's hometown of Oxford by the Gobblers, a shadowy organization of villains.
Conflict
Roger is kidnapped. Lyra receives the alethiometer. She meets Mrs. Coulter and discovers the woman's true character. She learns that Mrs. Coulter is her mother and Lord Asriel her father.
The conflict engine revs up with Roger's disappearance. The abduction spurs much of the action to come: namely, Lyra's desire to save him. We know a journey is probably in store for our fearless heroine.
Questions and conflicts surrounding Lyra's identity are also introduced in this section, as Lyra meets the beautiful and glamorous Mrs. Coulter, a woman she first admires then comes to loathe. Mrs. Coulter is, of course, connected to the Gobblers (the General Oblation Board), so we get more of an idea about what our villains look like. But we're still not sure exactly what they're doing to the kids. During Lyra's time with the gyptians, she discovers that Mrs. Coulter and Lord Asriel are her parents, signaling that Lyra's search for identity will become one of the novel's main concerns. The alethiometer is also introduced in this section, and we know that Lyra will have to learn to read it over the course of the book.
Complication
Lyra meets Lee Scoresby, Iorek the armored polar bear, and discovers what the General Oblation Board actually does.
The band of travelers heads to the North, and the group is made a bit bigger by the addition of two important characters. Lyra meets the Texan aeronaut Lee Scoresby. She also makes a dear friend in Iorek, a bear who has lost his armor and been exiled from his home country. Iorek's redemption storyline is set up here, as Lyra finds out that Iorek, reduced to an outcast, should have been king of the bears.
The horror of the General Oblation Board's actions are spelled out for us when Lyra and Iorek find the daemonless Tony in a village in the North. The novel makes plain the stakes of Mrs. Coulter and the Board's experiments, and Lyra's quest becomes all the more pressing.
Climax
Lyra frees the children from Bolvangar.
Captured by a band of traders and sold to the General Oblation Board, Lyra performs a daring rescue that resolves the Gobblers plotline. Lyra finds Roger among the children at Bolvangar. She meets again with Mrs. Coulter and escapes from her again to join forces with Iorek, Lee Scoresby, and the party of gyptians. Roger and the other children are freed and Bolvangar is under attack.
Suspense
Lyra and friends travel to Svalbard in Lee Scoresby's balloon. She is captured by the bears and tricks the bear king. Iorek defeats the bear king and regains his rightful place as king in Svalbard.
Lyra puts her tendency to exaggerate to good use here. In Svalbard she helps restore Iorek to the throne by tricking the bad bear king Iofur Raknison. Lyra's identity continues to take shape, as she learns to use her silver tongue for good rather than for exaggeration and fibbing.
Denouement
Lyra and Roger find Lord Asriel's remote laboratory in the North.
Lyra and Roger at long last find Lyra's father. Oddly enough, he doesn't want the alethiometer. The moment is a bit anti-climactic, as we're left wondering what it is that Lord Asriel does want. Careful readers will have already figured this out, as we see Lyra coming one step closer to betraying Roger. Lord Asriel clears up many of the novel's major mysteries here: we get more background information on Dust, its biblical origins, and Lord Asriel's thirst for power.
Conclusion
Lord Asriel severs Roger from his daemon and builds the bridge beyond the stars. Mrs. Coulter chooses to stay behind. Lyra and Pan come to the conclusion that Dust must be good, not bad. They follow Lord Asriel across the bridge.
The novel ends with Lyra's failure to save her friend Roger. Lord Asriel sacrifices the child in order to cross the bridge into another world, and Lyra becomes the betrayer that she was prophesied to be. Mrs. Coulter reappears and we see her reunited with her ex-lover, Lord Asriel, giving Lyra a glimpse into her parents' old relationship. A big game-changer happens at the end of the novel when we figure out that "Dust" is actually good – or at least Lyra and Pan seem to think so. The novel ends with a cliffhanger as Lyra and Pan follow her father cross the bridge to the stars.