Green Grass, Running Water opens with an unknown narrator explaining "the beginning," in which the trickster-god Coyote is present as well as the unknown narrator. Coyote has a dream which takes form and wakes Coyote up from his sleep. The dream thinks that it is very smart; indeed the dream thinks that it is god, but Coyote is only amused, labeling the dream as Dog, who gets everything backwards. Dog asks why there is water everywhere, surrounding the unknown narrator, Coyote, and him. At this, the unknown narrator begins to explain the escape of four Native American elders from a mental institution who are named Lone Ranger, Ishmael, Robinson Crusoe, and Hawkeye. The elders are each connected with a female character from native tradition: First Woman and the Lone Ranger, Changing Woman and Ishmael, Thought Woman and Robinson Crusoe, and Old Woman and Hawkeye. The book then divides into four main sections: each of these sections is the narration by one of the four elders.
In addition to these four explaining the "ordinary" events, they also tell a creation story that accounts for why there is so much water; in each creation story, the four encounter a figure from the Bible, as well as the western literary figure from whom each derive his name.
There are four major plot lines in the book. One of these follows the escape and travels of the elders and coyote who are out to fix the world. Dr Joseph Hovaugh and Babo, his assistant, try to track down the elders. Dr. Hovaugh keeps track of every time the elders have gone missing and he attributes major events like the eruption of Mount St Helens to their disappearances. The second plot line follows Lionel Red Dog, Charlie Looking Bear and Alberta. The third plot line follows Eli Stands Alone,