Trot is near her home on the coast of southern California when she meets a strange little boy with a large umbrella. Button Bright has been using his family's magic umbrella to take long-range journeys from his Philadelphia home, and has gotten as far as California. After an explanation of how the magic umbrella works, the two children, joined by Cap'n Bill, decide to take a trip to a nearby island; they call it "Sky island," because it looks like it's "halfway in the sky" — but the umbrella takes them to a different place entirely, a literal island in the sky.
Sky Island is another split-color country in Baum's fantasy universe, like the Land of Oz or the Island of Yew (in The Enchanted Island of Yew, from 1903). Divided in two halves, blue and pink, Sky Island supports two separate and hostile races of beings. The three travellers land on the blue side of Sky Island, which is a grim country ruled by a sadistic tyrant, the Boolooroo of the Blues. In Sky Island, as in Oz, no one can be killed or suffer pain, but that doesn't mean one is safe: the Boolooroo's method of punishing disobedience in his subjects is to split his victims into halves using a huge guillotine-type knife, and then join the wrong halves back together, creating very unhappy asymmetrical mixed people. This is called "patching." The Boolooroo threatens to do the same to his new visitors; meanwhile he keeps them imprisoned, and gives Trot as a slave to his daughters, the Six Snubnosed Princesses (named Cerulia, Turquoise, Sapphire, Azure, Cobalt, and Indigo).
The three protagonists manage to escape from the Blues; penetrating the Great Fog Bank that separates the island's halves and meeting its strange inhabitants, they reach the pink or "sunrise" side of the island. The pink country is a much friendlier and more relaxed place than the blue side, with cheerfully chubby residents. The visitors get a better reception, since they are rather pink in color themselves, albeit of a sadly wan and pale shade. Unfortunately, the laws of the pink country insist that the visitors be thrown off the edge of Sky Island; even the country's ruler, the sylph-like Tourmaline the Poverty Queen, cannot pardon them. Polychrome, however, descends from the rainbow like a deus ex machina to resolve the problem. Trot is promoted to Queen of the Pinkies, because she has the palest skin among them. After Cap'n Bill leads an invasion of the opposite side, Trot becomes "Booloorooess" of the Blues as well; and so she is able to "regulate" both societies into more sensible forms. The three travellers eventually return to their homes, more than a little relieved at their escape from Sky island.