"Needful Things" opens in the town of Castle Rock, Maine, sparking the curiosity of its citizens. The proprietor, Leland Gaunt, is a charming elderly gentleman who always seems to have an item in stock that's perfectly suited to any customer who comes through his door. The prices are surprisingly low, considering the merchandise - such as a rare Sandy Koufax baseball card, a carnival glass lampshade, and a fragment of wood believed to be from Noah's Ark - but he expects each customer to also play a little prank on someone else in Castle Rock. Gaunt knows about the long-standing private grudges, arguments, and feuds between the various townspeople, and the pranks are his means of forcing the tension to rise until the whole town is eventually caught up in madness and violence.
Polly Chalmers buys an ancient charm that relieves the arthritis pain in her hands. Gaunt eventually hires petty criminal John "Ace" Merrill as his assistant, providing him with high-quality cocaine and hinting at buried treasure that could relieve the debt he owes to a pair of drug dealers. Ace's first assignment is to retrieve crates of pistols, ammunition, and blasting caps from a garage in Boston; Gaunt soon begins to sell the pistols to his customers so they can protect their property. He has traveled the world for centuries, selling useless junk that appears to be whatever the customers desire most. They become so paranoid about keeping their items safe that they eagerly purchase all of the weapons that he inevitably offers and trades away their souls. Ace begins to suspect the supernatural background of his new employer, but Gaunt keeps him in line through intimidation and promises of revenge against Alan and the town. Eventually, the store causes so much violence in the town that a riot breaks out, resulting in much of the town being destroyed, including the store itself. Alan uses a bunch of magical items from Needful Things to force Gaunt back and grabs his valise, which contains the souls of his customers. Gaunt flees the scene, his car turning into a horse-drawn wagon as he becomes a hunchbacked dwarf, and the survivors are left to ponder an uncertain future.
The novel ends as it begins, with a first-person narrative indicating that a new and mysterious shop is about to open in a small Iowa town - an implication that Gaunt is ready to begin his business cycle all over again.