Kevin gets just what he wants for his fifteenth birthday — a Polaroid Sun camera. Soon though, he notices that there is something strange about the camera. It prints similar pictures all the time but never what the camera is pointed at. Instead, it shows a street with a white fence and a dog in the distance. Kevin takes the camera to Reginald "Pop" Merrill's junk shop, The Emporium Galorium, in hopes that Pop can fix it. When Pop sees the pictures, he asks Kevin to continue taking pictures with the camera on a regular basis. During this time, Kevin begins to see that the pictures are progressively showing movement, with the dog walking along in front of the fence. In the last set of pictures he takes for Pop, Kevin sees that the dog has stopped walking and is turning towards the camera. He also notices that the dog is wearing a string tie that belongs to him, which scares him into wanting to destroy the camera.
When Kevin's father John finds out that he has been talking to Pop, he tries to intercede, having had a personal experience where Pop had loaned him money at an outrageous interest rate, giving John an extreme distrust and dislike for the man. After Kevin and John turn the pictures over to Pop, Kevin tells him about his intentions, and Pop fools them by switching Kevin's camera with a different one. When Kevin smashes the other camera, Pop begins to visit some of his customers who are collectors of paranormal items (Pop calls these people "Mad Hatters") with the intent of selling the camera. When each of these customers refuse to buy the camera, Pop comes to believe that Kevin was right, and he is better off destroying the camera. As he had been showing off the camera, he had taken more and more pictures, and in these the dog had turned fully toward the camera and started hunch down, as if preparing to pounce. When Pop returns to his junk shop, he prepares to destroy the camera, but in a state of hallucination, instead destroys a clock, believing it to be the camera.
Meanwhile, Kevin had been having recurring nightmares about the other world in which the dog (which he now refers to as the "Sun Dog", from the name of his camera) exists. In these nightmares he sees various people who offer him warnings, and eventually the dog begins to chase him, with Kevin waking at the last minute before the dog finally catches up to him. These leads Kevin to realize that Pop had tricked him, and when he informs his father, he also sees through Pop's ruse and the two head to The Emporium Galorium to confront Pop and finally destroy the camera.
Pop, under the delusion that he had destroyed the camera, goes to the nearby drug store and, in another delusion, buys film for the camera, thinking the whole time that he was buying pipe tobacco. Kevin and John show up shortly after he leaves and Kevin, acting under the ambiguous warnings from his dreams, buys a new Polaroid camera. When the two get to Pop's junk shop, the see the flashes as Pop continues taking pictures with the "paranormal" Polaroid. With each one, the sound of the dog's growls become louder and louder, and by the time Kevin and his father get to the shop's door, the noise is so loud it shatters all the windows. By the time they enter the shop, the camera in Pop's hands has began to melt. As he takes the very last picture, the camera explodes and molten plastic hits Pop's neck, burning him fatally. The last picture begins to warp and bubble, and inside the bubble the dog begins to grow. Before he can break the membrane of the bubble and attack, Kevin takes it's picture with the camera he had gotten from the drug store, and the dog disappears.
The next year, Kevin is given a laptop for his birthday. After typing a test phrase, the printer prints out a different message, informing him that the dog is not dead - it is still alive, hungry, and very angry.
The audiobook version of The Sun Dog is read by Tim Sample.